The rupee’s ongoing depreciation is mainly due to a strengthening dollar and selling by foreign investors. As the currency continued to decline, it reached a fresh closing low of 84.40 against the US dollar.
The rupee settled at 84.40 after ranging from a high of 84.38 to a low of 84.41 during the day. According to market analysts, the rupee will likely trade between 83.80 and 84.50 in the medium run. The Reserve Bank of India (RBI) is anticipated to step in to prevent further fall
The US dollar index, which compares the value of the US dollar to a basket of six major currencies, was up 0.06% at 105.60. Pressure on the rupee has persisted as the dollar index has remained strong over 105. Additionally, Brent crude, the world’s benchmark for oil, increased by 0.60%, closing at USD 72.26 per barrel in futures.
The US Federal Reserve Chair Jerome Powell’s speech and the forthcoming US Consumer Price Index (CPI) statistics will have a significant effect on the dollar and overall investor sentiment. Given that the dollar index is already trading at a four-month high of 105.75, additional movement in the Indian rupee is probably in store.
A substantial collapse in domestic equity markets and ongoing withdrawals by foreign institutional investors (FIIs) coincide with the rupee’s slide. They sold shares worth Rs 3,024.31 crore on Tuesday, demonstrating their continued net selling behavior. With this, November’s total sales have surpassed 25,000 crore. This comes after sales of over Rs 90,000 crore in October. Given India’s stretched valuations, the majority of market experts claim that it is about reclassifying assets in the EM basket for foreign investors; yet, the sentiment was significantly impacted.
