On Wednesday, the Indian rupee went to another all-time low of 92.63 versus the US dollar, the currency has been performing poorly as the greenback firmens and the foreign fund flows continue to fall. The local currency was opened at 92.42 and traded within a very tight margin, and then crashed to the lowest point in its history throughout the trading session. Analysts blame the fall of the rupee to both the world dollar strength and the continued selling of the rupee by foreign institutional investors (FIIs).
The dollar index or the dollars relative to a basket of 6 currencies increased marginally to 99.62 indicating a stronger dollar. Meanwhile, the Brent crude futures were trading slightly down at around 103.2 per barrel and the crude prices were continuing to add strain to the import bill of India which further burdened the rupee.
The currency weakness however did not impact domestic equity markets. The benchmark Sensex went up 719.77 to 76,790.61 and the Nifty increased 215.75 to 23,796.90. Nevertheless, this did not stop the sale of equities at a rate of 4,741.22 crore by the FIIs on Tuesday as per exchange data and it shows the continued outflow of capital.
Precious metals reversed grievously in the commodities market as gold plummeted 0.54 per cent to 155,142 and silver 1.42 per cent to 249,501. According to market experts, unless foreign inflows are back and crude oil prices are stable, the rupee can remain under pressure in the near future.
The rapid depreciation of the rupee is an issue to the importers and may affect inflation and on the other hand the exporters may benefit with a weakened currency. Global uncertainties and capital flight within the country are closely observed by the policymakers in order to stabilize the currency situation.
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