The rupee fell by 8 paise on Thursday to settle at an all-time low of 84.50 against the US dollar, primarily due to a massive sell-off in domestic equity markets, ongoing foreign investment outflows, and surging crude oil prices due to geopolitical instability.
According to forex traders, the dollar is witnessing safe and robust growth because of its reputation as a haven amidst rising tensions between Russia and Ukraine.
In the interbank foreign exchange market, the rupee opened at 84.41 and fell to an all-time low of 84.51 against the US dollar during the day. It ended the session at 84.50 (provisional), surpassing its previous all-time low closing level of 84.46 recorded on November 14. On Tuesday, the rupee had settled flat at 84.42 against the US dollar.
The foreign exchange market remained closed on Wednesday due to assembly elections in Maharashtra.
Jateen Trivedi, VP of Research Analysis for Commodities and Currency at LKP Securities, said the rupee weakened due to pressure from the dollar rising above 106.65. Global uncertainties, driven by geopolitical tensions between Russia and Ukraine, contributed to increased risk aversion worldwide. Simultaneously, the sell-off in domestic equity markets peaked following the bribery and fraud charges faced by the Adani Group in the US
“This has further fueled FII outflows, continuing the trend of capital flight from Indian markets,” Trivedi said.
He added that the rupee’s trading range is expected to be between 84.35 and 84.65, with continued weakness likely in the near term.
Meanwhile, the dollar index, which compares the dollar’s strength against a group of six currencies, was up by 0.04 percent, trading at 106.66.
Brent crude, the global oil benchmark, surged by 1.35 percent to $73.93 per barrel in futures trade.
In the domestic stock market, the 30-share BSE Sensex dropped by 422.59 points, or 0.54 percent, ending at 77,155.79 points, while the Nifty fell by 168.60 points, or 0.72 percent, closing at 23,349.90 points.