 "Indian Rupee falls to a new low. Representative Image")
On Thursday, the Indian rupee extended its fall, hitting a new low of 90.43 against the dollar. One of the major reasons for the slide is the delay in the India-US trade deal and continued outflows from foreign portfolio investors (FPIs) from the domestic equity market, dampening the sentiments of the investors.
According to the early morning trade, the Indian currency declined 17 paise to open at 99.36, compared to the previous close of 99.19. It eventually plunged further to a new low of 90.43. Analysts believe that the steady outflow from FPIs has been a key factor putting pressure on the currency.
This year so far, the FPIs have sold Rs 1.52 lakh crore of shares. In just the first three days of December, they have offloaded Rs 8,369 crore of equities.
How India is looking at it
Meanwhile, immediate support for the rupee is at 89.20, followed by deeper channel support near 88.60. “The way the rupee broke past the 90 mark on Wednesday signals that the pressure hasn’t eased. In fact, the move suggests that pressure will remain, with the pair potentially drifting toward the 90.70–91.00 zone in the near term," Pabari of CR Forex told The Indian Express.
Market participants and experts will now watch closely how the Reserve Bank of India Governor Sanjay Malhotra’s remarks on the rupee in his monetary policy address on Friday.
On Wednesday, Chief Economic Advisor V Anantha Nageswaran said that he is “not losing his sleep over the rupee’s decline”. He went on to express confidence that the Indian currency “will come back next year.” The rupee slide was not “impacting inflation or exports” right now, he added.