On Friday, the Indian rupee reached a new historic low, settling at 88.27 against the US dollar, and the currency keeps losing its value as foreign fund outflows continue, and there are fears of new tariffs imposed by the United States. Local currency had lost 15 paise in the day, which indicated the general market anxieties about economic events in the world and money coming into the country.
In spite of the favourable forces, including a depreciated US dollar and declining crude oil prices, the rupee failed to bounce back. It started the day at 88.11 and hit an intra-day low of 88.38, but eventually closed at its tentative end-of-the-day market of 88.27. Analysts blame the relentless depreciation of the rupee on prolonged foreign institutional investor (FII) selling and the lack of certainty of Indian trade relations with major international partners.
The dollar index fell by 0.31 per cent to 98.03 in the international market, and the Brent crude future traded a little below USD 66.82 per barrel, an indication of slight relief in the global commodity pressures. But even these tendencies were not enough to balance domestic currency depreciation.
Domestically, the equity business was inconsistent. The Sensex fell by a narrow margin of 7.25 points to hit a close of 80,710.76, and the Nifty scored a minor gain of 6.70 points to close at 24,741. Turnover records showed that foreign institutional investors sold equities to the tune of ₹106.34 crore on Thursday, another blow to the rupee.
According to experts, the rupee is likely to remain volatile in the coming months as a result of the tension in world trade, the increase in the price of crude oil, and the current outflow of capital. They warn investors and businesses to be wary and watch currency trends keenly, and that, as a mitigating measure, businesses should consider hedging as one of the means of reducing future financial risks. This is as the Indian economy continues to ride through these headwinds and stabilises the rupee without losing investor confidence.
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