MUMBAI: The Indian rupee fell by 12 paise on Friday, before hitting an all-time low of 84.10 against the US dollar, weighed down by weak domestic equity markets and persistent foreign capital outflows.
Forex traders pointed to volatility in the Middle East as a factor likely to keep oil prices elevated, putting additional pressure on the rupee in the near term.
At the interbank foreign exchange market, the rupee opened slightly stronger at 83.97 against the dollar. During the session, it fluctuated between a high of 83.96 and a low of 84.10, eventually closing at the record low of 84.10, down from the previous close of 83.98.
Rising demand for dollar
“The Reserve Bank of India (RBI) has kept the rupee in a tight range below 83.99 since August 8, 2024, but finally allowed it to weaken past 84 due to sustained selling in equities by Foreign Portfolio Investors (FPIs), who are buying US Dollar to move funds out of the country,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
Bhansali added that the rupee could slip further to 84.25 in the short term, with importers buying on any dips, while exporters may hold back with a stop below 83.95. Geopolitical tensions involving Iran, Israel, and Lebanon are also expected to keep oil prices high and the rupee under pressure.
Dollar index
Meanwhile, the dollar index, which measures the US dollar’s strength against a basket of six major currencies, fell by 0.09 per cent to 102.89. Brent crude futures slipped 0.57 per cent to $78.95 per barrel.
In the domestic equity market, the BSE Sensex dropped 230.05 points to close at 81,381.36, while the Nifty fell 34.20 points, settling at 24,964.25.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets, offloading shares worth Rs4,162.66 crore on Friday, according to exchange data.
