New Delhi: The Indian rupee slipped to a record low of 84.40 against the US dollar in early trade on Wednesday, marking a fresh all-time low, as persistent foreign fund outflows, weakening domestic equities, and global dollar strength continue to weigh on the currency. The rupee fell by 1 paisa from its previous close, following a similar decline to 84.39 the day before. Forex traders noted significant volatility in the USD/INR pair in recent sessions, with the rupee approaching its historical low amid a strengthening Dollar Index. A key factor in the rupee’s depreciation is the broader trend of global dollar appreciation, which has led to higher demand for the greenback. Foreign Institutional Investors (FIIs) have been net sellers in the Indian capital markets, offloading shares worth Rs 3,024 crore on Tuesday, further exerting downward pressure on the rupee. At the same time, India’s foreign exchange reserves have declined for the fifth consecutive week, dropping to $682 billion, down from an all-time high of $704 billion, possibly due to the Reserve Bank of India (RBI) selling dollars to curb the rupee’s fall.
Meanwhile, the domestic equity market is also under strain, with the Sensex down by 0.27% and the Nifty falling by 0.42%. On the global front, Brent crude oil prices edged up by 0.25% to $72.07 per barrel, adding to concerns over higher import costs.
The rupee’s decline is compounded by inflationary pressures. India’s retail inflation surged to 6.21% in October, exceeding the Reserve Bank of India’s upper tolerance band and raising concerns over the overall economic stability. Despite these challenges, experts believe the rupee may find support near 84.50, given the RBI’s interventions.
In a positive sign, India’s industrial production grew by 3.1% in September, but this growth was slower than the 6.4% recorded in the same month last year, signaling a mixed economic outlook.
