The Indian rupee (INR) fell to a new record low against the US dollar (USD) on Monday, continuing its slide due to persistent foreign fund outflows and ongoing uncertainty surrounding a potential India-US trade deal.
Key Market Movements
- Intraday Low: The rupee weakened to 90.72 against the US dollar in intraday trade, marking a new all-time low.
- Opening/Closing: The rupee opened lower at 90.53 on Monday, following Friday’s all-time closing low of 90.49.
- Dollar Index: The dollar index, which measures the strength of the greenback against a basket of six major currencies, was slightly down by 0.05% at 98.35.
Factors Driving the Rupee’s Weakness
Forex traders and analysts point to a combination of external pressures causing the depreciation:
- Foreign Institutional Outflows (FIIs): Foreign investors continue to withdraw funds from Indian markets. Data shows Foreign Portfolio Investors (FPIs) sold equities worth ₹1,114.22 crore on Friday alone.
- Trade Deal Uncertainty: Investors are maintaining a “wait-and-watch” approach, remaining cautious due to the lack of clarity or breakthrough on the proposed India-US trade deal. Failure to secure this deal is warned to potentially push the rupee to further losses.
- RBI Intervention: According to Anil Kumar Bhansali of Finrex Treasury Advisors, the Reserve Bank of India (RBI) has been “selling dollars to fund [FPIs’] long positions,” suggesting active intervention to curb sharper depreciation.
- External Pressures: The rupee is currently heading towards its sharpest yearly fall since 2022, dragged by multiple external factors, including 50% US tariffs on Indian exports and uneven foreign portfolio flows.