The Indian rupee registered its sharpest single-day fall in over three months, slipping past the 89-per-dollar mark for the first time. The currency plunged 78 paise to hit an all-time low of 89.46 amid global market weakness, strong US dollar, FPI outflows, and uncertainty around US-India trade relations.
Rupee Crashes to Historic Low
New Delhi: The Indian rupee broke its record on Friday, recording its biggest single-day decline in three months. Amid negative cues from domestic and global stock markets and a strengthening dollar, the rupee slipped below the 89-rupee mark for the first time. The rupee fell sharply by 78 paise to 89.46 in the interbank foreign exchange market.
The rupee opened trading at 88.67 on Friday, but within a short time, it slipped to a new low of 89.50. By market close, it was trading at 89.40.
The rupee also fell on Thursday, weakening by 20 paise to close at 88.68.
Weakening of Federal Reserve Rate Cut Expectations
The market had previously expected the Fed to reduce rates soon. But when these expectations fizzled, the dollar strengthened, increasing pressure on the rupee.
Uncertainty over the India-US trade deal
The lack of trade clarity between the two countries weakened foreign investor confidence. This led to capital outflows and increased demand for the dollar.
Impact of US tariffs on Indian exports
Heavy US tariffs imposed since August have put pressure on India's exports. This has worsened the trade balance and increased demand for the dollar.
Foreign Investor Outflows (FPI Outflows)
Foreign investors have withdrawn $16.5 billion from Indian equities so far this year, putting continued pressure on the rupee.
Limited RBI intervention
The RBI previously supported the rupee at 88.80, but this time it became active around 89.50. This has led to an increase in short positions against the rupee in the market.
Hedging by importers and lower sales by exporters
Heavy dollar purchases by importers and low activity by exporters also weakened the rupee.
India’s Forex Reserves jump to 695.1 billion dollar, marking second consecutive weekly gain
The rupee had hit a low of 88.85 on September 30, and closed at 88.81 on October 14.
The rupee's biggest single-day decline was recorded on July 30, when it fell by 89 paise.
Meanwhile, the dollar index rose 0.04% to 100.05, further strengthening the dollar.
Brent crude fell 1.21% to $62.64 per barrel.
The Sensex closed at 85,272.28, down 360 points.
Nifty fell 111 points to 26,081.10.
According to stock exchanges, foreign investors bought equities worth ₹283.65 crore on Thursday, although their outflows were higher than for the year as a whole.
According to government data, growth in the country's eight key infrastructure sectors remained stable in October. A decline in coal and power production weighed on growth.
