The Indian Rupee weakened by 13 paise, hitting a new record low of 84.86 against the US Dollar during trading on Tuesday. The currency had opened lower at 84.79, weakening by 6 paise from the previous day’s close of 84.73. This marks a sharp dip despite a recent positive momentum for the rupee last week, when the Reserve Bank of India (RBI) held interest rates steady and announced measures to improve financial market liquidity.

Monday’s announcement of Sanjay Malhotra as the new RBI governor, following Shaktikanta Das' six-year tenure, further impacted the currency markets. The news led to the USD/INR pair surging to a record high of 84.86 in the Non-Deliverable Forward (NDF) markets. Under Das' leadership, the RBI had managed to shield the rupee from significant depreciation.

The RBI has taken several steps to stabilize the rupee and attract foreign capital, including raising the interest rate ceiling on Foreign Currency Non-Resident (FCNR) deposits by 200 basis points to 400 basis points. These changes, effective until March 31, 2025, aim to boost capital inflows. Additionally, the RBI reduced the Cash Reserve Ratio (CRR) by 50 basis points, which is expected to infuse Rs 1.16 lakh crore into the banking system starting December 14.

In a sign of caution, the RBI also revised its real GDP growth forecast for the current fiscal year, lowering it from 7.2% to 6.6%, reflecting a more cautious economic outlook for India.