The rupee slipped 1 paisa to an all-time low of 84.40 against the US dollar in early trade on Wednesday, as persistent foreign fund outflows and a muted trend in domestic equities weighed on the local unit.
Forex traders said the USDINR pair has shown significant volatility in recent sessions, with the rupee inching closer to its all-time low of 84.40. This downward pressure is largely driven by global factors, particularly the Dollar Index’s strengthening.
At the interbank foreign exchange, the rupee opened at 84.40 against the greenback, registering a fall of 1 paisa over its previous close.
On Tuesday, the rupee fell 1 paisa to a new lifetime low of 84.39 against the US dollar.
"It appears that the rupee has established support around the current levels, with depreciation limited near 84.50," CR Forex Advisors MD Amit Pabari said.
Pabari further added that the RBI stands tall as the depreciation in the rupee seems to be limited as the Reserve Bank of India (RBI) continues to sell the dollars to protect the sharp depreciation.
"For the 5th consecutive week, India’s forex reserves declined, possibly due to RBI selling the dollars. Currently, the forex reserves of India stand at USD 682 billion down from the recent all-time high of USD 704 billion," he said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading lower by 0.04 per cent at 105.98.
Brent crude, the global oil benchmark, rose 0.25 per cent to USD 72.07 per barrel in futures trade.
On the domestic equity market front, Sensex was trading 210.66 points, or 0.27 per cent lower, to 78,464.52 points. The Nifty fell 100.45 points, or 0.42 per cent, to 23,783.00 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, as they offloaded shares worth Rs 3,024.31 crore, according to exchange data.
On the macroeconomic front, retail inflation breached the Reserve Bank's upper tolerance level, soaring to a 14-month high of 6.21 per cent in October mainly on account of rising food prices.
Inflation based on the consumer price index (CPI) was 5.49 per cent in September and 4.87 per cent in the year-ago month.
India's industrial production expanded by 3.1 per cent in September after recording a contraction in the preceding month, as all three major segments -- mining, manufacturing, and power generation -- showed improvement.
However, the growth in the Index of Industrial Production (IIP) during the month was lower than 6.4 per cent registered in September 2023.
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