Lagatar24 Desk
Mumbai: The Indian rupee plunged 53 paise on Friday, marking its steepest single-day fall in six months to hit a new all-time intraday low of 85.80 against the US dollar in mid-session. The rupee’s decline was driven by the unabated rise in US bond yields, boosting the dollar’s appeal and intensifying selling pressure on Indian equities by foreign institutional investors (FIIs).
Opening weak at 85.31 at the interbank foreign exchange, the rupee tumbled to its historic low of 85.80, before recovering slightly to trade at 85.69 with a loss of 42 paise. This marked its sharpest single-day decline since March 22, 2023, when it fell by 48 paise.
Key Factors Behind the Fall
1.Foreign Investor Exit:
Analysts attributed the rupee’s slide to FIIs offloading ₹2,376.67 crore worth of shares on Thursday, seeking better equity valuations in other Asian markets.
2.Rising US Bond Yields:
The 10-year US Treasury yield hovering around 4.50% bolstered the dollar index, which rose by 0.08% to 107.98 against a basket of six currencies.
3.Crude Oil Prices:
Brent crude prices climbed 0.07% to USD 73.31 per barrel, further pressuring the rupee.
4.RBI’s Forward Contract Decisions:
Market speculation suggested the Reserve Bank of India (RBI) refrained from rolling over USD 21 billion in maturing short-side forward contracts for December and January, causing a dollar scarcity and rupee oversupply.
Market Reactions
Amit Pabari, MD of CR Forex Advisors, noted, “The imbalance in dollar liquidity and rupee oversupply propelled the USD-INR pair to 85.8075 levels.”
Despite the rupee’s plunge, the domestic equity markets displayed resilience, with the 30-share Sensex climbing 319.93 points to 78,792.41 and the Nifty gaining 89.60 points to reach 23,839.80.
The previous sharpest single-day fall was on February 2, 2023, when the rupee slid 68 paise.
