Rupee Declines 13 Paise to Record Low of 88.81 Against US Dollar Amid FII Outflows and Dollar Strength
The Indian rupee has hit a record low, closing at 88.81 against the US dollar on Tuesday, marking a decline of 13 paise. This drop is attributed to a combination of weak domestic equities and a strong dollar, reflecting a global risk-off sentiment. Despite the pressures, a decrease in crude oil prices and interventions by the Reserve Bank of India (RBI) helped to mitigate further losses.
Market Dynamics and Currency Performance
The rupee opened at 88.73 against the dollar and fluctuated throughout the day, reaching an intraday low of 88.82 before settling at 88.81. This decline follows the rupee’s previous all-time low of 88.80 recorded on September 30. Forex traders have noted that foreign fund outflows, driven by risk-averse global conditions, have negatively impacted investor sentiment. However, the rupee has shown resilience, maintaining a narrow trading range over the past two weeks, supported by central bank interventions and some foreign fund inflows. Analysts suggest that the USD/INR spot price may find support at 88.50, with resistance at 89.10.
Global Influences and Economic Indicators
The dollar index, which measures the greenback against a basket of six currencies, was up by 0.10% at 99.36. Meanwhile, Brent crude futures fell by 2.15% to USD 61.99 per barrel, which could favor the rupee in the near term. Experts have pointed out that ongoing trade tensions between the US and China, along with concerns over US-India trade tariffs, continue to weigh on investor sentiment. A senior official has indicated that a team of Indian officials will visit the US this week for trade discussions, with the aim of concluding the first phase of a proposed Bilateral Trade Agreement (BTA) by late 2025.
Domestic Economic Conditions
On the domestic front, India’s Consumer Price Index (CPI) inflation has eased to an eight-year low of 1.54% in September, down from 2.07% in August, falling below the RBI’s target of 2%. Additionally, the Wholesale Price Index (WPI) inflation also decreased to 0.13% in September from 0.52% in August. These figures suggest a cooling inflationary environment, which could influence monetary policy decisions moving forward. However, domestic equities faced a downturn, with the Sensex dropping 297.07 points to close at 82,029.98, and the Nifty declining by 81.85 points to 25,145.50. Foreign Institutional Investors (FIIs) sold equities worth Rs 1,508.53 crore on Tuesday, further contributing to market volatility.
Future Outlook
Looking ahead, analysts predict that the combination of weak global crude oil prices and potential foreign institutional inflows may provide some support for the rupee. The ongoing US government shutdown and increasing speculation about a rate cut by the US Federal Reserve could also impact the strength of the dollar. The USD/INR spot price is expected to trade within a range of 88.50 to 89, as market participants closely monitor both domestic and international economic developments.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
Follow Us on Twitter, Instagram, Facebook, & LinkedIn
