The Indian rupee has hit a fresh all-time low of 84.11 to a US dollar mainly on account of continued FPI outflows from Indian equities.
Continuing its weakening streak, the Indian rupee on Monday hit a fresh all-time low of 84.11 to a US dollar mainly on account of continued FPI outflows from Indian equities.
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The domestic currency had hit its previous all-time low on Thursday at 84.10 per US dollar. The Forex market remained closed on Friday on account of Diwali.
“FPIs (foreign portfolio investors) continue to sell Indian equities and buy dollars, while the Reserve Bank of India (RBI) is not so aggressive in selling the greenback as of now,” said Anil Kumar Bhansali, head (treasury) and executive director at Finrex Treasury Advisors LLP.
A higher demand in the dollar makes it expensive against other currencies, thus leaving other currencies weaker.
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According to forex traders, the rupee is likely to trade in a narrow range during the day as the strong dollar weighs on the local unit and rising crude oil prices dragged down the local unit.
They said that any intervention by the RBI may support the rupee at lower levels.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.58 per cent lower at 103.70.
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Indian equities on Monday are witnessing massive selloff, with the BSE Sensex plunging by as much as 1,109 points or 1.4% to 78,614 and the NSE Nifty declining by 366 points or 1.51% to 23,938.
At the interbank foreign exchange, the rupee opened at 84.07 against the greenback. In the initial trade, it touched 84.06, registering a rise of 1 paisa over its previous close.
The market capitalisation of all listed companies on BSE declined by Rs 8.44 lakh crore to Rs 439.66 lakh crore.
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The FPI Outflows
Foreign investors pulled out a massive Rs 94,000 crore (around USD 11.2 billion) from the Indian stock market in October, making it the worst-ever month in terms of outflows, triggered by the elevated valuation of domestic equities and attractive valuations of Chinese stocks.
Before this, foreign portfolio investors (FPIs) withdrew Rs 61,973 crore from equities in March 2020. The latest outflow came after a nine-month high investment of Rs 57,724 crore in September 2024.
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Since June, FPIs have consistently bought equities after withdrawing Rs 34,252 crore in April-May. Overall, FPIs have been net buyers in 2024, except for January, April and May, data with the depositories showed.
