Rupee hits a low of 84.40 against the US dollar on weak investor sentiment
The Indian rupee continued its slide, hitting a new record low of 84.40 against the US dollar in early trade on Tuesday. This marks a 2-point decline from the previous close of 84.38, as continued foreign fund outflows and a strong US dollar weighed on investor confidence.
The rupee started trading at 84.39 in the interbank forex market before moving further to its current low. Market analysts suggest that the currency could trade between 83.80 and 84.50 in the medium term. Despite the downturn, the Reserve Bank of India (RBI) is expected to step in to avoid a major downturn, using its large foreign exchange reserves to support it.
Market performance and global factors
The US dollar index, which measures the dollar’s strength against six major currencies, rose 0.09 percent to 105.63, indicating continued strengthening of the US currency. Additionally, Brent crude oil prices fell slightly by 0.25 percent, trading at USD 71.65 per barrel in futures.
Earlier, Indian equity markets showed mixed performance. The Sensex edged up 77.35 points to 79,573.50, while the Nifty index rose 19.90 points, to 24,161.20.
Foreign currency outflows continue
Foreign Institutional Investors (FIIs) remained the biggest sellers, offloading shares worth Rs 2,306.88 crore on Monday. The recent sell-off by FIIs follows the broad outflow trend seen in mid-November, driven by concerns over higher stock valuations and weaker-than-expected corporate earnings in Q2.
Market results
The gradual depreciation of the rupee amid continued outflows indicates caution to investors. However, RBI’s strong stance and tight forex reserves could provide a cushion against another sharp cut. The upcoming economic data releases and global market trends will be closely watched for signs of the rupee’s trajectory.
