Mumbai: The Indian rupee slumped to a new record low on Monday, falling to 84.3875 against the U.S. dollar, as concerns over a potential Donald Trump victory in the U.S. presidential election and continued outflows from Indian equities weighed heavily on the currency.
The rupee’s decline eclipsed its previous all-time low of 84.38 reached on Friday, with the currency trading at 84.37 by 09:40 a.m. IST. Asian currencies also came under pressure, with most seeing losses ranging from 0.1% to 0.4% as the dollar index held steady near a four-month high of 105, driven by market expectations of a more hawkish U.S. economic policy under a Trump administration.
Despite the weakening trend, interventions by the Reserve Bank of India (RBI) helped prevent a sharper fall, traders said. State-run banks were reportedly offering dollars in the market on Monday, likely acting on behalf of the RBI to stabilize the currency.
The RBI’s efforts to support the rupee have contributed to a sustained decline in India’s foreign exchange reserves, which fell to a two-month low of $682.13 billion as of Nov. 1, marking the fifth consecutive week of drops in reserves. Analysts have expressed concerns that the ongoing interventions could further deplete the country’s reserve buffer.
The rupee’s weakening is also linked to the outflow of foreign institutional investments (FII). So far in November, foreign investors have pulled out a net $2.5 billion from Indian equities, following an $11 billion outflow in October. This has weighed on sentiment and contributed to a sluggish performance in Indian equity markets. On Monday, benchmark indices such as the BSE Sensex and Nifty 50 were slightly down, marking their fifth consecutive weekly decline.
Amit Pabari, Managing Director at CR Forex, stated, “The rupee is likely to remain under pressure unless there is a softening in the dollar index or a slowdown in FII outflows.”
With global markets reacting to the political uncertainty surrounding the U.S. election and the ongoing pressure on Indian markets, traders remain cautious about the rupee’s outlook in the near term.
