Rupee Hits Record Low :The Indian rupee tumbled to an all-time low of 86.31 per US dollar during early trade on Monday, marking a sharp decline of 27 paise from its previous close. Despite efforts to stabilize the currency, global economic uncertainty, rising crude oil prices, and continuous foreign capital outflows have exerted immense pressure on the rupee.
Rupee Opens at 86.12, Plunges Further
In the interbank foreign exchange market, the rupee opened at 86.12 per dollar and later touched its historic low of 86.31. This represents a significant drop of 27 paise from the previous close of 86.04. On Friday, the rupee had already weakened by 18 paise.
Rupee Hits Record Low:Key Factors behind the Decline
According to forex traders, several factors have contributed to the rupee’s decline, including:
- Strength of the US Dollar: The dollar index, which gauges the greenback’s strength against six major currencies, rose by 0.22% to 109.72.
- Crude Oil Prices Surge: International benchmark Brent crude witnessed a 1.44% increase, trading at $80.91 per barrel.
- Foreign Fund Outflows: Persistent withdrawal of foreign capital from Indian markets has added to the rupee’s depreciation.
- Weak Domestic Equity Markets: Negative sentiment in the stock market further weighed on the Indian currency.
Impact on Equity Markets
The bearish trend extended to the equity markets, with both Sensex and Nifty experiencing significant losses.
- Sensex Performance: The BSE Sensex fell 843.67 points to 76,535.24 in early trade.
- Nifty Performance: The NSE Nifty declined by 258.8 points to 23,172.70.
Among Sensex-listed companies, Asian Paints, Zomato, Mahindra & Mahindra, HDFC Bank, Bajaj Finance, Kotak Mahindra Bank, and Tata Steel recorded the steepest losses. Conversely, IndusInd Bank, Axis Bank, Tata Consultancy Services, and Hindustan Unilever managed to register gains.
Global Market Sentiments
The decline in the rupee aligns with weak trends in Asian and global markets:
- Asian Markets: South Korea’s KOSPI, Hong Kong’s Hang Seng, and China’s Shanghai Composite ended in the red.
- US Markets: American equity indices closed on a negative note last Friday.
Bond Yields and Crude Oil Prices
The performance of US treasury yields and crude oil prices further underscored market volatility:
- US Treasury Yields: The 10-year US bond yield climbed to 4.76%, a level not seen since October 2023.
- Crude Oil Prices: Brent crude jumped by 1.62%, reaching $81.05 per barrel in international markets.
Who Gains, Who Loses?
- Top Losers: Stocks of Asian Paints, Zomato, Mahindra & Mahindra, and Tata Steel bore the brunt of the market sell-off.
- Top Gainers: IndusInd Bank, Axis Bank, Tata Consultancy Services, and Hindustan Unilever managed to stay in the green amid the downturn.
Conclusion: Economic Uncertainty Looms
Rupee Hits Record Low:The continued decline in the rupee reflects the challenges posed by global economic uncertainty and domestic market conditions. With crude oil prices surging and foreign investors pulling out funds, the Indian currency faces further pressure in the near term. Stabilizing the rupee will require concerted efforts from policymakers to address these multifaceted issues.
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