Rupee Reaches Record Low of 85.87 Against US Dollar Amid Crude Price Surge

The Indian rupee has continued its downward trend for the second consecutive session, closing 13 paise lower at an all-time low of 85.87 against the US dollar. This decline occurred on January 8, 2023, as rising crude oil prices and a strong dollar put additional pressure on the currency.

The rupee started the day at 85.82 in the interbank foreign exchange market but quickly fell to an intra-day low of 85.89 before settling at 85.87. On the previous trading day, the rupee had closed at 85.74, reflecting a loss of six paise.

Forex analysts attribute the ongoing depreciation of the rupee to several factors. These include sustained outflows of foreign funds and investor caution stemming from the government's recent downward revision of economic growth forecasts. The National Statistics Office (NSO) has projected GDP growth for 2024-25 at a relatively low rate of 6.4%, the lowest in four years, citing weak performance in both the manufacturing and services sectors.

Compounding these challenges, the dollar index, which measures the US dollar's performance against a basket of six major currencies, rose by 0.35% to 108.76. Market observers have noted the high yields on US Treasury bonds, which stood at 4.67%, indicating market expectations of a delay in potential rate cuts by the Federal Reserve.

In the commodities market, the price of Brent crude oil surged by 0.9%, trading at approximately $77.74 per barrel. This increase raises further concerns regarding India's import costs and its impact on the economy.

On the domestic front, equity markets did not provide much relief. The BSE Sensex fell by 50.62 points to close at 78,148.49, and the Nifty index declined by 18.95 points to finish at 23,688.95. Additionally, foreign institutional investors (FIIs) remained net sellers, having offloaded Rs 1,491.46 crore in the capital markets on Tuesday.

The rupee's declining value highlights the necessity for potential policy adjustments aimed at stabilizing the currency in the face of global economic challenges. Analysts are closely monitoring upcoming data releases and policy decisions that may influence the rupee's future trajectory.

rupee, dollar, crude