Asian Currency

Explainer: Why Indian Rupee Reached All-Time Low Against Dollar – Key Factors


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Indian Rupee vs Dollar (Image Source: Times Now Digital)

New Delhi: The Indian rupee weakened against the US dollar on Friday. The Rupee closed at 84.07 for the first time it ended above the 84 per dollar mark. During the day, the rupee dropped further to 84.10 before recovering slightly by the close. However, the overnight softening of the US dollar limited the rupee’s fall. The dollar weakened after higher-than-expected unemployment data in the US, which overshadowed concerns about rising inflation.

Indian Rupee vs US Dollar

On Thursday, the rupee had ended at 83.98 per dollar, but it slipped on Friday as concerns over rising crude oil prices, foreign fund outflows, and increased dollar demand from foreign banks took a toll.

Why Did The Rupee Slide?

There are several reasons behind the Indian rupee’s decline but the primary reasons include:

– Rising Crude Oil Prices

India depends heavily on oil imports, and higher prices increase the need for dollars.

– Foreign Fund Outflows

Global investors are withdrawing funds from India and shifting investments to China, attracted by China’s recent monetary and fiscal measures aimed at reviving its slowing economy.

– Higher Dollar Demand From Foreign Banks

Increased demand for the dollar also weighed on the rupee.

FII Selling

Foreign Portfolio Investors (FPIs) have been selling Indian stocks heavily in recent days, following the “Sell India, Buy China” strategy. FPIs have already offloaded Rs 58,711 crore worth of equities and Rs 1,635 crore in debt between October 1-11.

This comes after four straight months of buying, during which foreign investors poured Rs 1.24 lakh crore into Indian equities between June and September, according to data from the National Securities Depository Ltd (NSDL).

RBI’s Intervention

The Reserve Bank of India (RBI) has been actively defending the 84-mark for the past two months. Previously, on September 12, the rupee had fallen to 83.99 — its lowest point before Friday’s drop.





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