Home / Business and Economy / Rupee Hits Record Low: Dollar Demand, Fund Outflows Bite
Rupee Hits Record Low: Dollar Demand, Fund Outflows Bite
20 Jan
Summary
- Rupee hit a record low of 90.97 against the US dollar on Tuesday.
- Strong dollar demand from metal importers and foreign fund outflows pressured the rupee.
- Geopolitical uncertainties and a weak domestic stock market contributed to the decline.
The Indian rupee experienced a significant decline, closing at a provisional record low of 90.97 against the US dollar on Tuesday. This depreciation of 7 paise was primarily driven by robust demand for dollars from metal importers and continuous outflows of foreign funds, which collectively weakened investor confidence.
Forex traders indicated that escalating geopolitical uncertainties, coupled with signals of renewed US expansionary policies, have amplified global risk aversion. This trend has put emerging market currencies, including the rupee, under considerable pressure. A sluggish domestic stock market, exacerbated by substantial foreign capital exodus, further weighed on the local currency.
Analysts anticipate that the rupee will likely maintain a negative bias in its trading. This outlook is attributed to ongoing foreign fund outflows and global risk aversion, particularly concerning the US stance on Greenland and potential trade deal uncertainties. However, a weaker dollar internationally and potential intervention by the Reserve Bank of India (RBI) may provide some support at lower levels.
