Early on December 30, the rupee fell 5 paise versus the US dollar, reaching Rs 85.53. Increased demand from importers, withdrawals of foreign investment, and a decline in activity in the Indian equities market are the factors for the decrease in investor mood.
The rupee opened worse at the interbank foreign exchange, falling 5 paise from its previous close to Rs 85.53 versus the US dollar. At the same time, the dollar index, which measures how the US dollar performs in relation to a basket of six major currencies, was at 108.00.
Due to higher demand for dollars, the rupee saw considerable volatility on Friday and began lower on Monday. Forex dealers attributed this in large part to the maturing of holdings in outstanding forwards and the expiration of December currency futures.
The rupee fell as sharply as it has in almost two years on Friday, hitting a lifetime intraday low of Rs 85.80. However, any losses were prevented by a rumored central bank intervention, and the rupee ended the day 21 paise down versus the US dollar, closing at a record low of Rs 85.48.
Exchange data shows that on Friday, foreign institutional investors (FIIs) net sold Rs 1,323.29 crore in the capital markets.
In the meantime, the Reserve Bank of India announced that, for the week ending December 20, the nation’s foreign exchange reserves decreased by $8.478 billion to $644.391 billion. Reserves fell $1.988 billion to $652.869 billion, a six-month low, in the week prior.
The RBI’s revaluation and currency market operations to help support the rupee have been the primary causes of the reserves’ ongoing decrease over the past few weeks. By the end of September, the reserves had risen to a record high of $704.885 billion.
