Mumbai: The Indian rupee continued its downward slide on Monday, depreciating by 1 paisa to reach an unprecedented low of 84.38 against the US dollar in early trading. This decline is primarily attributed to sustained foreign fund outflows and a lackluster performance in domestic equity markets.
Foreign exchange analysts indicate that the rupee may remain under pressure unless there’s a weakening of the dollar index or a slowdown in the exodus of foreign capital. At the interbank foreign exchange market, the rupee opened at 84.38 against the greenback, marking a slight drop from its previous close.
On the previous trading day, Friday, the rupee had already dipped by 5 paise to settle at a new all-time low of 84.37 against the US dollar, marking its third consecutive session of losses.
The past week saw the rupee facing significant headwinds amid the U.S. elections and continued foreign fund withdrawals. After witnessing equity sell-offs worth nearly USD 12 billion in October, foreign investors have persisted in pulling out funds in November, with outflows totaling approximately USD 1.6 billion in just the first ten days.
“This trend highlights the overvaluation of Indian equities coupled with underwhelming second-quarter earnings,” said Amit Pabari, Managing Director of CR Forex Advisors. “In the medium term, we expect the rupee to trade within the 83.80 to 84.50 range, as the Reserve Bank appears poised to limit further depreciation using its substantial forex reserves,” he added.
Meanwhile, the dollar index—which measures the U.S. currency against a basket of six major currencies—edged up by 0.05% to 105.05. In global commodities, Brent crude futures, the international oil benchmark, declined by 0.37% to USD 73.60 per barrel.
On the domestic front, the equity markets reflected a subdued trend. The BSE Sensex fell by 12.47 points, or 0.02%, to 79,473.85, while the NSE Nifty dropped by 5.65 points, or 0.02%, to 24,142.55.
Foreign Institutional Investors (FIIs) remained net sellers in the capital markets on Friday, offloading shares worth ₹3,404.04 crore, according to exchange data.
Adding to the economic concerns, India’s forex reserves decreased by USD 2.675 billion to USD 682.13 billion for the week ending November 1, as reported by the Reserve Bank of India. This follows a decline of USD 3.463 billion in the previous week, bringing the reserves down from the all-time high of USD 704.885 billion recorded at the end of September.
