New Delhi: Financial markets faced a turbulent week, with the rupee plummeting to record lows amid a mix of rising crude prices, cautious investor sentiment, and persistent foreign fund outflows. On Thursday, the rupee dropped 6 paise to close temporarily at 84.37 against the US dollar, marking its lowest ever level. This follows Wednesday’s significant 22 paise drop to 84.31, highlighting the currency’s sustained vulnerability.
Key Drivers Behind the Drop
Forex traders cited caution over the upcoming US Federal Reserve meeting as a major factor holding investors back from riskier bets. In addition, surging crude oil prices have further weakened the rupee, putting extra strain on the Indian economy, which is highly sensitive to oil import costs. Traders also pointed out a slight silver lining: a decline in the dollar index, which tracks the dollar’s strength against six major world currencies, provided some relief, limiting the rupee’s losses.
Market Reaction and Stock Performance
In the interbank foreign exchange market, the rupee opened at 84.26 and fluctuated between a high of 84.26 and a low of 84.38 during the trading session. By the close, it had lost 6 paise, settling at 84.37 per dollar.
The stock market saw sharp declines as well. The 30-share BSE Sensex dropped 836.34 points, closing at 79,541.79, while the Nifty fell by 284.70 points to end at 24,199.35. Foreign Institutional Investors (FIIs) contributed to the market’s instability, becoming net sellers in the capital market. Data revealed that FIIs offloaded shares worth ₹4,445.59 crore on Wednesday, further dampening investor sentiment.
Global Indicators and Oil Prices
In international markets, the dollar index registered a mild weakness, dipping by 0.22 percent to 104.86. Meanwhile, global oil benchmark Brent crude slipped 0.32 percent to $74.68 per barrel, offering slight relief amid otherwise unfavorable conditions.
Outlook for Investors
As uncertainty looms over the Federal Reserve’s next moves, traders expect the rupee to remain under pressure in the near term. Analysts anticipate that any significant shifts in US interest rates could prompt further fluctuations in the rupee’s value, depending on how global funds react. Investors are advised to watch both oil price trends and foreign investment flows, as these will likely play pivotal roles in determining the rupee’s path and market stability in the coming days.
