Rupee Depreciates 26 Paise Amidst Uncertainty In Lok Sabha Election Outcome And Stock Market

At the interbank foreign exchange market, the domestic unit opened on a weak note at 83.25 and slipped further to trade at 83.40 against the US dollar in initial deals

The trends contradicted the predictions of the exit polls and this weighed heavily on the domestic currency

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The Indian rupee depreciated 26 paise to touch 83.40 against the American dollar in early trade on Tuesday as the initial trends of the Lok Sabha Elections 2024 indicated a mixed mandate. The domestic currency tanked owing to a muted trend in the Indian equity markets, in turn impacting investor sentiments, forex traders noted. 

As the early trends from the election results started coming in, a clear mandate for PM Narendra Modi’s Bharatiya Janata Party (BJP)-led NDA alliance seemed difficult. The trends contradicted the predictions of the exit polls and this weighed heavily on the domestic currency. The counting of votes for the elections started Tuesday morning.

At the interbank foreign exchange market, the domestic unit opened on a weak note at 83.25 and slipped further to trade at 83.40 against the US dollar in initial deals, reported PTI. In the last trading session on Monday, the Indian currency settled at 83.14 against the greenback. 

At the same time, the dollar index, which tracks the currency’s strength against a basket of six currencies, traded 0.05 per cent lower at 104.02. The global oil benchmark, Brent crude futures, slipped 0.61 per cent to touch $77.88 per barrel.

As of 10:18 AM, the domestic equity benchmark indices plunged following the uncertainty regarding the election outcome. The S&P BSE Sensex traded at a loss of 1,719 points or 2.25 per cent at 74,749.78, while the NSE Nifty50 stood at 22,777.15, logging a fall of almost 500 points or more than 2 per cent.

Foreign institutional investors (FIIs) bought Indian equities worth Rs 23,451.26 crore on Monday reacting to the exit polls which predicted an easy majority for the NDA alliance in the range of 300 to 350 seats. While exit polls provide an insight into the expected outcome of the polls, it is not always necessary that these projections are accurate.