Rupee crashes 13 paise to settle at record low of 84.60 against US dollar

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The rupee plunged 13 paise to settle at a fresh all-time low of 84.60 against the United States (US) dollar on Friday, dragged down by unabated foreign fund outflows even as weak domestic macroeconomic data jolted the overall sentiment.

Forex traders said that the demand for dollar from importers for meeting month-end payment obligations weighed on the rupee even as the gross domestic product (GDP) data released by the government later in the day adversely impacted the currency market, toppling the local unit to its record low, news agency PTI reported.

The Indian rupee declined by 13 paise to close at a record low of 84.60 against the US dollar on Friday, pressured by continuous foreign fund outflows and weak domestic macroeconomic indicators. Forex traders attributed the fall to high dollar demand from importers meeting month-end payment obligations. Additionally, the GDP data released later in the day further dampened market sentiment, driving the rupee to its lowest level on record.

Data from the government revealed that India's economic growth slowed to a near two-year low of 5.4 per cent during the July-September quarter of the current fiscal year, PTI reported. This was largely owing to underperformance in the manufacturing and mining sectors, alongside weak consumption demand. By comparison, the GDP growth stood at 8.1 per cent in the same quarter of 2023-24 and 6.7 per cent in the first quarter of 2024-25. The last instance of such low growth, at 4.3 per cent, was recorded in the October-December quarter of 2022-23, PTI reported.

The government also reported that the fiscal deficit for the first seven months of this financial year reached 46.5 per cent of the full-year target, slightly higher than the 45 per cent recorded during the corresponding period last year.

In another key economic indicator, the growth in output of eight core infrastructure sectors dropped to 3.1 per cent in October 2024, a sharp decline from the 12.7 per cent growth registered in the same month last year. However, on a monthly basis, output growth improved slightly from the 2.4 per cent recorded in September 2024, reported PTI.

BSE Sensex closes at 79,802.79, NSE Nifty advances 216.95 points

At the interbank foreign exchange market, the rupee opened at 84.49, briefly strengthened to 84.48 before sliding to 84.60 during intra-day trading, where it eventually closed. This marked a significant fall of 13 paise from its previous close. The rupee's previous all-time low closing of 84.50 occurred on 21 November. On Thursday, it had declined by 7 paise to close at 84.47 against the US dollar.

Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, commented that the rupee is likely to maintain a negative bias due to the strong dollar and ongoing geopolitical tensions between Russia and Ukraine. "Any surge in crude oil prices amid the geopolitical tensions and month-end dollar demand from importers may also weigh on the rupee," he noted. "However, a positive tone in the domestic markets and any intervention by the Reserve Bank of India (RBI) may support the rupee at lower levels. USD-INR spot price is expected to trade in a range of 84.35 to 84.70," he added.

Meanwhile, the dollar index, which measures the strength of the US currency against a basket of six currencies, was down 0.15 per cent, trading at 105.88. Brent crude futures also declined by 0.30 per cent to $73.06 per barrel.

In the domestic equity market, the 30-share BSE Sensex rose sharply by 759.05 points or 0.96 per cent to close at 79,802.79, while the NSE Nifty advanced 216.95 points or 0.91 per cent to end at 24,131.10. Despite the upbeat equity market performance, Foreign Institutional Investors (FIIs) were net sellers, offloading ₹4,383.55 crore in the capital markets, according to exchange data.

India's foreign exchange reserves fell by $1.31 billion to $656.582 billion for the week ending 22 November, according to the Reserve Bank of India (RBI). This followed a record drop of $17.761 billion in the preceding week, which brought reserves down to $657.892 billion.

(With PTI inputs)