Indian rupee hits all-time low of ₹86 against US dollar
What's the story
The Indian rupee (INR) has witnessed a sharp fall, hitting an all-time low of ₹86 against the US dollar today. The fall is mainly attributed to a stronger American currency and heavy outflow of foreign funds. The rupee opened at ₹85.88 in the interbank foreign exchange market, touched a high of ₹85.85, before ending at its lowest-ever level of ₹86 (provisional) against the greenback.
Market influences
Factors contributing to INR's depreciation
Rising global crude oil prices and negative sentiment in domestic equity markets also dragged INR down. The US dollar strengthened on increased demand, driven by expectations of restrictive trade measures from the new US administration post-January 20. Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, highlighted these factors as reasons for the rupee's record low performance.
Future outlook
Choudhary predicts continued pressure on rupee
Choudhary predicts that weak domestic markets, a strong US dollar, and persistent outflows of foreign institutional investors (FIIs) may continue to weigh on INR. He also suggests that rising crude oil prices and an increase in US treasury yields could further weigh on the domestic unit. However, he notes that any intervention by Reserve Bank of India (RBI) could potentially support the rupee at lower levels.
Information
Dollar index and Brent crude witness surge
The dollar index, which gages the greenback's strength against six currencies, was trading 0.01% higher at 109.01. Meanwhile, Brent crude, the global oil benchmark, witnessed a sharp rise of 1.96% to $78.43 per barrel in futures trade.