Rupee slips to all-time low of 84.11 against US dollar amid weak equities

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The rupee slipped 4 paise to close at an all-time low of 84.11 (provisional) against the US dollar on Monday, weighed down by weak domestic markets and persistent foreign capital outflows, as per PTI. Forex traders noted that the rupee's record low reflected a negative trend in domestic equities, which dropped by nearly 1.18 percent, alongside ongoing foreign investor selling.

At the interbank foreign exchange market, the rupee opened at 84.07 per US dollar, fluctuating between a high of 84.06 and a low of 84.12 during the trading session. It finally settled at 84.11, marking a decline of 4 paise from its previous close. On Thursday, the rupee had shown minor recovery, gaining 1 paisa to reach 84.07 against the dollar. However, the forex market remained closed on Friday due to the Diwali holiday.

The rupee's decline was compounded by a recovery in global crude oil prices, which rose 2.63 percent, with Brent crude trading at USD 75.02 per barrel. Higher oil prices typically exert pressure on the Indian rupee, as India imports a significant portion of its crude oil. Meanwhile, foreign institutional investors (FIIs) were net sellers in India's equity markets on Friday, offloading shares worth Rs 211.93 crore, according to PTI.

Additionally, India's foreign exchange reserves recorded a notable decline. According to data from the Reserve Bank of India, forex reserves fell by USD 3.463 billion to USD 684.805 billion in the week ending October 25. This followed a previous dip of USD 2.163 billion the week before. In September, the reserves had reached a record high of USD 704.885 billion, indicating a considerable decrease in reserves since then.

While the rupee faced selling pressure, the softening of the US dollar provided some support, preventing a sharper fall. The dollar index, which tracks the strength of the US dollar against a basket of six major currencies, slipped by 0.52 percent to 103.73. According to Anuj Choudhary, a research analyst at Sharekhan by BNP Paribas, the dollar's decline was triggered by disappointing economic data from the US, including non-farm payrolls and ISM manufacturing PMI figures. The US economy added only 12,000 jobs in October, well below the forecast of 106,000 jobs, while the ISM manufacturing PMI dropped to 46.5, under the expected 47.6, Choudhary noted.

Looking forward, the rupee may continue to face pressure due to weak domestic market conditions and sustained FII outflows, Choudhary explained. However, he added that further softening of the US dollar could provide some support at lower levels. Traders are likely to keep an eye on the upcoming factory orders data from the US and the Federal Open Market Committee (FOMC) meeting scheduled later this week.

In the stock market, the BSE Sensex closed 941.88 points, or 1.18 percent, lower at 78,782.24, while the NSE Nifty declined by 309 points, or 1.27 percent, to finish at 23,995.35, according to PTI.

According to PTI, forex analysts expect the USD-INR exchange rate to fluctuate within the range of 83.95 to 84.30 in the near term.

(With inputs from PTI)