The Indian rupee weakened further to hit an all-time low of 84.38 against the US dollar in early trade on Monday, falling by 1 paisa from its previous close. Persistent foreign fund outflows and a muted trend in domestic equities have kept the rupee under pressure, with forex experts indicating limited relief unless there is a decline in the dollar index or a slowdown in foreign capital outflows. The dip comes after the rupee ended Friday’s trading session at 84.37 per dollar, marking its third consecutive day of declines.
At the interbank foreign exchange, the rupee opened at 84.38, marking its lowest level against the greenback. The recent weakness in the rupee aligns with ongoing US election developments and a continued retreat of foreign funds from Indian markets. In October, foreign investors withdrew nearly USD 12 billion from Indian equities, and the trend has persisted in November, with approximately USD 1.6 billion in outflows recorded within the first 10 days. According to Amit Pabari, Managing Director of CR Forex Advisors, these outflows reflect investor concerns over the perceived overvaluation of Indian equities and recent disappointing Q2 earnings reports.
Despite the rupee’s downward trend, Pabari noted that it may remain within a limited trading range, with the Reserve Bank of India (RBI) likely to prevent further declines using its ample foreign exchange reserves. “In the medium term, the rupee is expected to trade within the 83.80 to 84.50 range,” he explained, suggesting that the RBI’s reserves would serve as a buffer against further depreciation.
In global markets, the dollar index—which measures the strength of the US dollar against a basket of six major currencies—rose by 0.05% to 105.05, further strengthening the dollar against emerging market currencies like the rupee. Meanwhile, Brent crude, a benchmark for global oil prices, also dropped by 0.37% to USD 73.60 per barrel in futures trade.
In the domestic equity market, the BSE Sensex was down by 12.47 points, or 0.02%, trading at 79,473.85 points. Similarly, the NSE Nifty dropped 5.65 points, or 0.02%, to 24,142.55 points. Foreign Institutional Investors (FIIs) continued to be net sellers in the capital markets, offloading shares worth ₹3,404.04 crore on Friday.
Adding to the rupee’s challenges, India’s foreign exchange reserves have continued to decline, falling by USD 2.675 billion to USD 682.13 billion for the week ending November 1, as per RBI data. This follows a previous week’s drop of USD 3.463 billion, marking a steady decline from the all-time high of USD 704.885 billion in September.
