Rupee hits all-time low of 84.76 against US dollar on foreign outflows and global concerns

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The Indian rupee slid by 4 paise to a new all-time low of 84.76 against the US dollar in early trade on Tuesday, driven by a stronger dollar in global markets and ongoing foreign portfolio outflows. Forex traders cited various factors, including remarks by US President-elect Donald Trump about BRICS currencies, political instability in the Eurozone, and weaker domestic economic indicators as key contributors to the rupee's depreciation.

The rupee opened at 84.75 against the greenback in the interbank foreign exchange market, briefly touching the all-time low of 84.76, representing a decline of 4 paise from its previous close. On Monday, the rupee had already fallen by 12 paise, closing at a then-record low of 84.72.

The strengthening of the US dollar, coupled with the ongoing geopolitical tensions and political uncertainty in Europe, continued to weigh heavily on the rupee. Notably, President-elect Donald Trump had recently threatened to impose a 100% tariff on the BRICS bloc countries if they took steps to undermine the US dollar. This added to investor uncertainty, further pressuring the rupee.

Additionally, the market is awaiting the Reserve Bank of India's (RBI) monetary policy meeting scheduled for December 6, with investors hoping for signs of measures to balance inflation and economic growth in the face of external challenges.

At the same time, the dollar index, which measures the strength of the US currency against a basket of six other major currencies, was up by 0.07% at 106.51. Meanwhile, global oil prices continued their upward trajectory, with Brent crude increasing by 0.18% to USD 71.96 per barrel in futures trade.

On the domestic front, the rupee's depreciation is being exacerbated by persistent foreign selling. Foreign Institutional Investors (FIIs) were net sellers on Monday, offloading equities worth Rs 238.28 crore, as per exchange data. Despite these challenges, India's Minister of State for Finance, Pankaj Chaudhary, stated that the rupee remains one of the best-performing currencies in Asia, underscoring India's robust economic fundamentals.

Chaudhary pointed out that, despite geopolitical tensions in the Middle East and other global uncertainties, the Indian rupee had shown resilience, especially given the broad-based strength of the US dollar. He further explained that the depreciation of the rupee could enhance export competitiveness, although it may also increase the cost of imported goods.

As the RBI monitors key global developments, traders will continue to keep a close eye on the currency's movements, along with broader market sentiment and international factors, such as the upcoming US elections and developments in the Middle East.

(With inputs from PTI)