The Indian Rupee closed flat against the US Dollar at 84.109 on Tuesday. Earlier in the morning trade the rupee opened at a new low after closing at a record low of 84.11 against the US dollar on Monday.
Rupee, already under significant pressure, opened at a record low of 84.13 on Tuesday.
Early indications in the morning had already suggested that the rupee may open at another new low on Tuesday, continuing its downward trajectory.
Forex analysts predicted that the rupee may trade within a range of 84.05 to 84.25 during the day, as external factors and persistent market volatility continue to weigh on the currency.
The rupee hit an all-time low of 84.1225 on Monday, further exacerbating concerns over its vulnerability. A series of global factors have contributed to the rupee’s slide, including heightened uncertainty in international markets around the US elections and ongoing foreign portfolio investor (FPI) outflows. Foreign investors have been selling US stocks in large volumes, prompting them to buy dollars to fund these outflows, which has further pressured the rupee.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, noted that the Reserve Bank of India (RBI) has been intervening to absorb the currency’s fall but has allowed small bouts of depreciation to push the rupee to new lows. “The RBI has been present to absorb the fall, but at the same time, they have allowed gradual depreciation, which is why the rupee has hit new lows against the dollar,” Bhansali said.
The Indian rupee has faced consistent pressure in recent weeks, driven by foreign fund outflows exceeding Rs 1.25 lakh crore from Indian equities. This has significantly contributed to the currency's decline, which started in earnest after the rupee crossed the 84 mark on October 11, 2024. Despite brief moments of recovery, such as a small uptick to 84.06 on Monday morning, the rupee has failed to maintain momentum and has struggled to regain strength.
The currency’s struggles are also being influenced by a strong US dollar and rising global crude oil prices, both of which continue to add pressure on emerging market currencies. Despite RBI interventions, forex traders are bracing for continued volatility, with limited expectations for a significant recovery in the near future.
With the rupee’s recent slide, market sentiment remains bearish, and analysts expect the currency to trade within a narrow range of 84.05 to 84.25 in the coming days.