The Indian rupee slipped to a historic low on Wednesday, hitting 84.1950 against the US dollar as early results from the US presidential election fueled a surge in the greenback. The rupee declined by 0.1 per cent from Tuesday’s closing, while other Asian currencies saw larger losses. The offshore Chinese yuan, Korean won, Malaysian ringgit, and Thai baht dropped between one per cent and 1.3 per cent, reflecting heightened risk aversion as market participants awaited a potential Republican victory.

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Analysts suggest the rupee’s more restrained movement could be due to likely intervention by the Reserve Bank of India (RBI). Recent months have seen the RBI selling dollars to curb excessive rupee depreciation. According to Ritesh Bhusari, joint general manager for treasury at South Indian Bank, the RBI seems open to allowing the rupee’s gradual depreciation but remains committed to controlling drastic fluctuations. "We don't see the rupee declining below 84.25 on a sustainable basis," Bhusari noted.

The dollar index surged 1.5 per cent to a four-month high of 105.19, with election trends indicating a strong showing for Republican candidate Donald Trump. Betting markets estimate Trump’s odds of victory at nearly ninety per cent. His stance on tariffs, including a proposed 10 per cent levy on all imports and a 60 per cent duty on Chinese goods, has stirred investor interest in “Trump trades,” driving demand for the dollar.

Trump's position on trade relations with India has also sparked concerns. During his campaign, he criticized India’s high tariffs and pledged to introduce reciprocal tariffs if elected.

The rise in the dollar put pressure on US Treasury yields, with the ten-year yield climbing fifteen basis points to 4.44 per cent, while US equity futures gained. Preliminary election projections show Trump with 230 electoral votes, while Democrat Kamala Harris trails with 187 votes, leaving the final outcome uncertain and markets on edge. 

With the currency markets closely tracking the US election, the rupee’s path may depend on further RBI action and how the election results shape global trade and investment flows.