The Indian rupee accelerated weakness to an all-time low of 84.30 per dollar on Thursday amid meeting selling pressure from foreign portfolio investors (FPI) and expectations that Trump’s victory as the US President could further bolster the greenback in the near term.
It was the third successive day that the rupee plunged to a low; it had touched a low of 84.28 on Wednesday.
President Trump’s policy plan, which includes deregulation and tax cuts, has also been said to have played a role in the decline of the rupee. It is expected that some of these undertakings will lead to increased growth of the economy in the USA and, therefore, could lead to the rise of the dollar as the preferred international currency compared to other global currencies. Thirdly, the prospect of American tariffs has an influence on the currency of Europe and Asia, which in turn increases the attractiveness of the US dollar.
However, the dollar has remained resilient, and the dollar index, a benchmark that measures the greenback against a sample of six foreign currencies, fell by 0.1 percent to 104.9 on Thursday. This index had earlier risen to a four-month business peak of 105.12 on Wednesday and continues to act in a volatile manner.
Thus, there are negatives to the rupee from foreign investor behaviour in India equities as well. About Rs 4,445.6 crore worth of Indian stocks were sold by FPI only on Wednesday, which further led to the fall of the rupee.
During the last month, FPIs have sold a massive Rs 1.35 lakh crore from Indian stocks because of apprehensions over the relative performance of the Indian economy vis-a-vis the US economy.
Analysts are quick to point out that with people being more inclined to invest in the dollar, the rupee may continue to slide. In light of new pressures following the outflows and FPI outflows, the rupee experienced further lows in the forex market.
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