The Indian Rupee fell on the last day (Friday) with a close of around 88.78 to the US dollar, which is also close to the record low, as fears of foreign fund outflows took their toll on the investor sentiment. The local currency was down nine paise since the last close, and this showed a further weakness of the market. The rupee has so far depreciated by 3.70 per cent, and it recently hit an all-time low of 88.80 on Tuesday.
The fall followed the announcement of the Reserve Bank of India (RBI) that it would maintain interest levels at the same level in the recent Monetary Policy Committee (MPC) meeting. Although the policy position was kept at a neutral position, the RBI pointed out that the impact of the past front-loaded monetary policy and the recent fiscal policy were yet to be felt. The central bank also changed its growth forecast for FY26 by increasing it to 6.8 per cent and reducing the inflation forecast to 2.6 per cent. Governor of RBI Sanjay Malhotra reiterated that the RBI has no objective for the rupee to any specific value and the main aim is to contain excess volatility in the currency markets.
In the meantime, the US dollar index continued its downward trend as former US President Donald Trump announced that he wants to lay off thousands of government workers in the event of a government shutdown. The index, which compares the greenback with a basket of six major currencies, fell by 0.07 per cent to 97.77.
Crude oil prices in the commodities market were kept down as they were close to four-month lows due to long-term oversupply fears. Brent crude rose 0.55 per cent at 64.46 per barrel and WTI crude increased 0.56 per cent at 60.82 per barrel at 3.40 pm IST. Analysts observed that the mix of uncertainty in the global economy, outflows of foreign capital as well, and oversupply concerns in commodities have added prolonged pressure.
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