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The rupee declined 6 paise to close at a fresh lifetime low of 84.37 (provisional) against the U.S. dollar on Thursday (November 7, 2024), as weak domestic equities and sustained foreign fund outflows dented market sentiment.

Forex traders said investors were also cautious ahead of the U.S. Fed meeting outcome. Moreover, overnight gains in crude oil prices also weighed on the local unit.

“However, a correction in the dollar index against major currencies helped the rupee and restrained the slide,” they added.

At the interbank foreign exchange, the rupee opened at 84.26 against the U.S. dollar. During the session, the local currency touched a high of 84.26 and a low of 84.38. It finally settled at 84.37 (provisional), a loss of 6 paise against its previous close.

On Wednesday (November 6, 2024), the rupee depreciated 22 paise to close at an all-time low of 84.31 against the U.S. dollar.

The rupee touched fresh record lows again on the back of weak domestic equities and sustained FII outflows. Overnight gains in crude oil prices also weighed on the rupee. However, the softening of the U.S. Dollar index from Wednesday’s (November 6, 2024) highs cushioned the downside, forex traders said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.22% lower at 104.86.

Brent crude, the global oil benchmark, fell 0.32% to $74.68 per barrel in futures trade.

“We expect the rupee to trade with a negative bias on overall strength in the US Dollar on the back of Donald Trump’s victory in the US Presidential elections and FII outflows. However, softening of commodity prices amid easing geopolitical risk premium may support the rupee at lower levels,” said Anuj Choudhary – Research Analyst at Sharekhan by BNP Paribas.

Any intervention by the RBI may also support the rupee at lower levels. Traders may take cues from weekly unemployment claims data from the US and FOMC meeting decisions. The Bank of England’s monetary policy decision is also due.

BoE and FOMC are expected to cut interest rates by 25 bps. USD/INR spot price is expected to trade in a range of 84.15 to 84.60, Choudhary said.

In the domestic equity market, the 30-share BSE Sensex fell 836.34 points, or 1.04%, to close at 79,541.79 points, while Nifty declined 284.70 points, or 1.16%, to settle at 24,199.35 points.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday (November 6, 2024), as they offloaded shares worth ₹4,445.59 crore, according to exchange data.

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The rupee fell 2 paise to 83.81 against the U.S. dollar in early trade on Tuesday (October 1, 2024), tracking massive outflow of foreign funds amid volatile global markets.

Forex traders said a strengthening American currency weighed down the Indian unit against major rivals, though retreating crude oil prices and recovery in domestic equity markets resisted a steep fall in the rupee.

They said monetary and fiscal stimulus announced by China triggered the withdrawal of foreign funds as investors preferred better-performing Chinese markets.

At the interbank foreign exchange, the local unit opened at 83.81 against the greenback, registering a loss of 2 paise from its previous closing level.

On Monday (September 30), the rupee settled 10 paise lower at 83.79 against the American currency.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.02% to 100.54.

Brent crude, the international benchmark, declined 0.29% to 71.77 in futures trade.

On the domestic equity market front, the Sensex climbed 251.03 points or 0.30% to 84,550.81, while the Nifty rose 63.40 points or 0.25% to 25,874.25. Both the indices tumbled nearly 1.5% on Monday (September 30).

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Monday (September 30), offloading shares worth ₹9,791.93 crore, according to exchange data.

Meanwhile, official data released on Monday (September 30) showed that the government’s fiscal deficit — the gap between expenditure and revenue — at the end of the first five months of the current financial year touched 27% of the full-year target.

Also, the Reserve Bank data released on Monday (September 30) showed the country’s current account deficit widened marginally to $9.7 billion or 1.1% of GDP in April-June 2024, as against $8.9 billion or 1% in the year-ago period.