Rupee Collides to All-Time Low of 85.06 Against US Dollar

The Indian national rupee fell to an all-time low of 85.06 against the US dollar during the early trade. The fall can be attributed to a hawkish stance by the US Federal Reserve in the coming year triggering disruptions in the emerging market economies including the Indian currency.

At the interbank foreign exchange, the domestic unit fell by about 12 paise from previous day’s close on account of high foreign fund outflows, muted growth in domestic equities and high dollar demand from importers.

Rupee witnessed heavy beating as the US dollar index ballooned to a two-year high of 108.04, while US 10-year bond yield rose to 4.51 per cent, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

Though, US FED slashed the interest rates by 25 bps or 0.25%, it held a hawkish tone for the near future denoting that the 2% inflation target could take another year or two. It indicated a rate cut of 50 bps in 2025, and further 50 bps in 2026.

Bhansali said, “A broad sell-off in equities, commodities, and bonds has kept the dollar well bid. We expect a slow and steady depreciation as the Reserve Bank of India (RBI) may protect key levels though may not change the direction.”

On a net basis, Foreign Institutional Investors (FIIs) pulled out nearly ₹1,316.81 crore worth of equities on Wednesday, exchange data said.

BSE Sensex traded lower at 79,271.25 points in morning trade, down 910.95 points or 1.144, while Nifty slumped by 1.16% to 23,917.70 points.