Rupee falls to record low of 95.23 against US dollar
The rupee declined 39 paise to close at a record low of 95.23 against the US dollar amid rising crude oil prices, foreign fund outflows and Middle East tensions. Analysts warned that continued pressure on oil prices may further weaken the Indian currency
Mumbai: The rupee fell 39 paise to close at an all-time low of 95.23 (provisional) against the US dollar on Monday, as ongoing Middle East tensions caused volatility in global markets, keeping oil prices high and raising fears of inflation and economic slowdown.
Forex traders said Brent oil, hovering near USD 110 per barrel, was maintaining pressure on oil-importing economies like India. Moreover, factors such as unabated foreign capital outflows amid rising geopolitical uncertainties dented investor sentiment further.
At the interbank foreign exchange market, the rupee opened at 94.95 against the US dollar, then lost ground and finally settled at 95.23 (provisional), registering a fall of 39 paise over its previous close.
On Thursday, the rupee had settled at 94.84 against the American currency.
Stock exchanges and currency markets were closed on Friday on account of Maharashtra Day.
Dilip Parmar said the Indian rupee hit a record low as the dollar recovered and crude oil prices held firm.
He said the ongoing surge in oil prices, combined with foreign fund outflows, was putting visible pressure on India’s trade balance and broader economy.
“Persistent dollar demand is expected to keep pressure on the rupee in the short term, driving the USD/INR higher towards the 95.35 and 95.70 levels,” Parmar said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 98.26, up 0.11 per cent.
Brent crude, the global oil benchmark, was trading 1.37 per cent higher at USD 109.65 per barrel in futures trade.
Investors were also focused on the counting of votes for the West Bengal state elections, IFA Global said in a research note. It added that a BJP victory would be positive for domestic assets. However, the impact was likely to be short-lived as global geopolitics would continue to be the driving factor due to its direct impact on supply chains and industry.
On the domestic equity market front, Sensex rallied 355.90 points to settle at 77,269.40, while Nifty climbed 121.75 points to 24,119.30.
Foreign Institutional Investors offloaded equities worth Rs 8,047.86 crore on Thursday, according to exchange data.
Meanwhile, V Vualnam on Friday said the upcoming few quarters and the coming year would possibly have “a lot of stress points”.
“The fiscal stress is indeed very much a reality, but at the same time, capex would really be a priority item, which we would like to preserve and ensure that it continues at the budgeted level,” Vualnam said at the ICPP Growth Conference organised by Ashoka University.
