Rupee falls 1 paisa to all-time low of 84.38 against U.S. dollar in early trade

Forex traders said the rupee is likely to remain under pressure unless there is a softening in the dollar index or a slowdown in foreign fund outflows

The rupee slipped 1 paisa to an all-time low of 84.38 against the U.S. dollar in early trade on Monday, weighed down by persistent foreign fund outflows and a muted trend in domestic equities.

Forex traders said the rupee is likely to remain under pressure unless there is a softening in the dollar index or a slowdown in foreign fund outflows.

At the interbank foreign exchange, the rupee opened at an all-time low of 84.38 against the greenback, registering a fall of 1 paisa over its previous close.

On Friday, the rupee dropped 5 paise to hit a new lifetime low of 84.37 against the U.S. dollar, registering a decline for the third straight session.

Last week, the rupee came under pressure amid the US elections and sustained foreign fund outflows. Following nearly USD 12 billion in equity sell-offs in October, foreign funds have continued their retreat in November, with outflows of around USD 1.6 billion recorded in just the first 10 days.

This trend reflects the overvaluation of Indian equities and disappointing Q2 earnings, CR Forex Advisors MD Amit Pabari said.

"In the medium term, the rupee is expected to trade within the 83.80 to 84.50 range, as the Reserve Bank seems to cap the downside of the rupee with sufficient Forex reserves in its kitty," Pabari added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.05% at 105.05.

Brent crude, the global oil benchmark, fell 0.37% to USD 73.60 per barrel in futures trade.

On the domestic equity market front, Sensex was trading 12.47 points, or 0.02% lower, to 79,473.85 points. The Nifty fell 5.65 points, or 0.02%, to 24,142.55 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Friday, as they offloaded shares worth ₹3,404.04 crore, according to exchange data.

Meanwhile, India's forex reserves declined by USD 2.675 billion to USD 682.13 billion for the week ended November 1, the RBI said on Friday.

In the previous week, the overall reserves had dropped by USD 3.463 billion to USD 684.805 billion. At September-end, the reserves had hit an all-time high of USD 704.885 billion.

Published - November 11, 2024 10:25 am IST