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Rupee Falls Below 84 Mark as FPIs Exit, Oil Prices Rise
On Friday, the Indian rupee breached the 84-mark, closing at 84.06 against the US dollar due to sustained foreign portfolio investor (FPI) outflows and rising crude oil prices. The domestic currency hit an intra-day low of 84.07 before settling at this new record low.
RBI’s Intervention Amid Rupee Weakness
The Reserve Bank of India (RBI) had been actively defending the rupee from falling below the 84-level, reportedly discouraging aggressive bets against the currency. Despite this, the rupee opened at 83.96 at the interbank foreign exchange market, just a paisa higher than Thursday’s closing of 83.97. However, by the end of the day, the rupee tumbled to 84.07 and closed at 84.06.
According to experts, the weakening of the rupee can be attributed to FPIs selling equities and buying USD to take money out of India. Anil Kumar Bhansali of Finrex Treasury Advisors LLP noted that the rupee may continue to depreciate and could touch 84.25 in the short term.
Geopolitical Tensions and Market Reactions
The ongoing geopolitical tensions, particularly the Iran-Israel conflict, have kept oil prices elevated, adding further pressure on the rupee. Traders anticipate the rupee’s trajectory will also depend on RBI’s actions to manage volatility in the currency market.
Market Indices Decline as Investor Sentiment Weakens
Equity markets also felt the pressure, with the BSE Sensex falling by 230.05 points to close at 81,381.36, while the NSE Nifty slipped by 34.20 points to end at 24,964.25. The sell-off in banking, utility, and financial stocks, coupled with foreign fund outflows, led to the market’s decline.
Vinod Nair of Geojit Financial Services attributed the lackluster market performance to the absence of fresh triggers, along with concerns over rising US bond yields and core inflation.
As geopolitical uncertainties persist, market volatility is expected to continue, with both currency and equity markets closely watching global developments.
