Rupee Hits Record Low Against Dollar Amid Non-Stop Foreign Fund Exodus

The rupee hit an all-time low on Friday against the US Dollar amidst foreign investors' continued exodus from domestic equities and bonds which has also depressed the local currency.

The rupee weakened to 84.4975 per US dollar in early trading on Friday (22nd November). This is a further low of its earlier all-time low of 84.4925 on Thursday (21st November). 

The decline in rupee value coincided with ongoing turbulence in Indian equity markets. The BSE Sensex dropped 0.5 per cent, while the Nifty 50 fell 0.7 per cent. Notably, Adani Group shares saw a sharp sell-off— Adani Enterprises plunged over 20 per cent. Foreign institutional investors (FIIs) pulled Rs 3,412 crore from equities on Tuesday.

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Two factors are mainly responsible for the decline in Rupee during this month (November). First is strengthening of dollar after Donald Trump's victory in the US elections. Outflow from Indian market is the other major factor. Overseas investors have pulled out over USD 4 billion from local equities and debt.

Moreover, the geopolitical risks, particularly the Ukraine-Russia war has contributed to challenge rupees trajectory further.

The rupee has weakened nearly 0.5 per cent so far in November, despite Reserve Bank of India's routine interventions including on Friday. However, experts believe that India's healthy foreign exchange reserves may help in keeping rupee volatility in check.

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