Rupee Plummets 53 Paise To Hit All-Time Low Against US Dollar

While domestic equity markets showed positive movement, they were unable to counter a wave of foreign investors selling, as lower equity valuations in other Asian markets became more attractive

The previous sharpest single-day decline of 68 paise occurred on February 2, 2023

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The rupee experienced its sharpest single-day drop in six months, plunging 53 paise to reach an all-time intraday low of 85.80 against the US dollar during Friday's mid-session. The sharp decline was driven by the ongoing rise in US bond yields, which increased the dollar's appeal.

While domestic equity markets showed positive movement, they were unable to counter a wave of foreign investors selling, as lower equity valuations in other Asian markets became more attractive. This led to a significant exit of foreign institutional investors from Indian stocks, further pressuring the rupee, according to analysts. Additionally, rising crude oil prices contributed to the rupee's further depreciation.

At the interbank foreign exchange, the rupee opened weaker at 85.31 and fell to a record low of 85.80 during mid-session, marking its steepest single-day drop since March 22 of this year, when it closed 48 paise lower. By the end of the day, the rupee was trading 42 paise down at 85.69.

The previous sharpest single-day decline of 68 paise occurred on February 2, 2023. On Thursday, the rupee had already fallen 12 paise to 85.27 against the dollar, after a 13-paise drop in the previous two sessions.

Amit Pabari, MD of CR Forex Advisors, said, "The central bank holds $21 billion in short-side forward contracts set to mature in December and January. Market speculation suggests that the RBI has refrained from rolling over these maturing forwards, leading to a scarcity of dollars and an oversupply of rupees. Moreover, dollar liquidity in the market remains very low, amplifying the upward momentum in the pair. This imbalance has propelled the USD-INR pair towards 85.8075 levels."

Meanwhile, the dollar index, which measures the strength of the greenback against a basket of six currencies, rose by 0.08 per cent to 107.98, supported by surging US Treasury yields, with the 10-year bond hovering around 4.50 per cent. 

Brent crude, the global oil benchmark, increased by 0.07 per cent to $73.31 per barrel in futures trading.