The Indian rupee crashed to a historic low against the US dollar as rising oil prices, geopolitical tensions, and foreign investment outflows create a perfect storm in the currency market.
Illustration: Dominic Xavier/Rediff
Key Points
- The Indian rupee fell to a record low of 94.82 against the US dollar, driven by high crude oil prices and a strengthening US dollar.
- Uncertainty surrounding the West Asia conflict is contributing to the dollar’s strength and negatively impacting the rupee.
- Domestic stock market declines (Sensex and Nifty) and continuous foreign institutional investor (FII) outflows are adding pressure on the rupee.
- Global oil benchmark Brent crude is trading above USD 109 per barrel, further weakening the rupee.
- The dollar index, measuring the dollar’s strength against other currencies, is up, exacerbating the rupee’s decline.
The rupee tanked 86 paise to close at yet another all-time low of 94.82 (provisional) against the US dollar on Friday, weighed down by elevated oil prices and a stronger greenback amid uncertainties over the West Asia conflict.
A sharp decline in the domestic equity markets and sustained FII outflows put further pressure on the local unit, according to forex traders.
At the interbank foreign exchange, the rupee opened at 94.18 and breached the 94.50-mark for the first time before closing at 94.82 (provisional) against the US dollar, down 86 paise from its previous close.
The rupee slumped 20 paise to close at a record low of 93.96 against the US dollar on Wednesday. Stock, forex, commodity, and bullion markets remained closed on Thursday on account of Ram Navami.
Global Market Factors
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.11 per cent higher at 100.
Brent crude, the global oil benchmark, was trading at USD 109.8 per barrel, up 0.53 per cent, in futures trade.
Domestic Market Performance
On the domestic equity market front, the Sensex crashed 1,690.23 points, or 2.25 per cent, to 73,583.22 points, while the Nifty fell 486.85 points, or 2.09 per cent, to 22,819.60.
Foreign institutional investors sold equities worth Rs 1,805.37 crore on a net basis on Wednesday, according to exchange data.
