Rupee Breaches 84-Mark To Hit A New Low As Equity Outflows Weigh

The rupee weakened to surpass the psychological barrier of 84 mark on Friday as consistent selling of stocks on Dalal Street by global funds weighed on the Indian currency.

The domestic currency weakened to a record low of Rs 84.03 after opening at 83.96 against the US dollar, according to Bloomberg. The domestic current had closed at 83.98 against the greenback on Thursday.

Foreign investors sold Indian stocks for the ninth straight day on revival for Chinese stocks coupled with valuation worries. In the last nine sessions, FIIs have offloaded domestic stocks worth over Rs 65,200 crore, according to the provisional data from NSE. During the same period, domestic investors mopped up stocks worth Rs 67,500 crore.

The movement comes as the dollar index declined by 0.06%, settling at 102.9310, while Brent crude prices dipped 0.49% to $79.01 per barrel.

The rupee makes a new low as foreign portfolio investors continue buying the dollar while RBI sells, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

The latest US inflation data showed a rise in underlying inflation, with Core CPI advancing 0.3% in September for the second consecutive month. This pause in moderating price pressures, combined with last week’s rise in US jobless claims numbers, has fuelled debate over whether the Federal Reserve will pursue a small rate cut next month or pause after its large September reduction.

Despite this, the dollar index remained subdued and US 10-year yields dipped slightly to 4.065%. Brent oil prices continued to rise due to ongoing tensions in West Asia, especially after Israel's bombing of Lebanon.

Bhansali forecasted a rupee trading range of 83.85 to 84.05 for the day. He advised exporters to sell on upticks, as the RBI continues to protect the 83.99 level, and importers to buy on dips with a stop loss at 84.02 for unhedged imports.

Amit Pabari, managing director of CR Forex Advisors, noted the impact of rising oil prices, driven by Hurricane Milton, which has pushed crude to around $80 per barrel, further pressuring India’s trade deficit. However, Pabari sees a brighter outlook for the rupee, with substantial inflows expected to provide support in the near future.