The Indian rupee weakened further on Thursday, closing 8 paise lower at 89.30 against the US dollar.
According to early market data, the currency opened at 89.19, but sustained pressure throughout the session pushed it lower as the dollar strengthened globally.
Why Did the Rupee Fall Today?
Several key factors contributed to the rupee’s decline:
1. Stronger US Dollar Index
The US dollar gained momentum against major global currencies, putting downward pressure on emerging market currencies like the rupee.
2. Persistent Foreign Fund Outflows
Foreign institutional investors continued to pull money out of Indian equities and debt markets, increasing demand for the dollar.
3. Crude Oil Price Volatility
Global crude prices remained firm, raising concerns about India’s import bill and pressuring the rupee.
4. Mixed Domestic Market Sentiment
While equity markets showed resilience, broader economic sentiment remained cautious, limiting support for the currency.
Rupee’s Intraday Movement
Opening level: 89.19 per USD
Day’s high: Slight improvement in early trade
Closing level: 89.30 per USD (down 8 paise)
Despite some intraday recovery attempts, strong dollar demand from importers and foreign outflows kept the rupee under pressure.
Global Market Factors at Play
Globally, currency markets remained volatile as investors:
Anticipated fresh commentary from the US Federal Reserve
Reacted to signs of resilience in the US economy
Monitored geopolitical tensions that have historically boosted dollar demand
These factors collectively made the greenback stronger against most Asian currencies.
RBI’s Role and Market Outlook
The Reserve Bank of India (RBI) is believed to have intervened mildly to manage excess volatility, though no major action was observed.
Market analysts expect:
Continued pressure on the rupee in the short term
Movement in line with crude prices and US economic data
Possible relief if foreign inflows resume
The rupee has been trading in a narrow but weakening band over the past few sessions.
FAQs
1. Why did the rupee fall to 89.30 today?
Due to a stronger US dollar, foreign fund outflows, and firm global crude prices.
2. Does a falling rupee impact the economy?
Yes—imports become costlier, pushing up inflation, but exporters may benefit.
3. Is the RBI intervening?
The RBI generally intervenes to curb excessive volatility, though not daily.
4. How does crude oil affect the rupee?
India imports most of its crude; higher prices increase dollar demand, weakening the rupee.
5. What could help the rupee recover?
Foreign inflows, softer crude prices, and a weaker US dollar.
Published on : 27th November
Published by : SMITA
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Source Credit: Content inspired by reporting from Press Trust of India (PTI).