The rupee slipped 28 paise to a new all-time low of 90.43 against the US dollar in early Thursday trade, pressured by heavy Foreign Institutional Investor outflows and limited intervention from the Reserve Bank of India ahead of the crucial Monetary Policy Committee (MPC) decision.
Forex traders noted that muted RBI action, along with strong dollar demand from importers, continued to weigh on the domestic currency. At the interbank foreign exchange market, the rupee opened at 90.36 and soon dropped further to its record low of 90.43, marking a 28-paise decline from its previous close.
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A day earlier, the rupee had breached the 90-per-dollar mark for the first time, closing at a fresh low of 90.15.
Chief Economic Adviser V Anantha Nageswaran on Wednesday said that the weakening rupee was not impacting inflation or exports. While a softer rupee supports outbound shipments, it also makes imports costlier. Sectors heavily dependent on imports, including gems and jewellery, petroleum, and electronics, may face reduced benefits due to rising input costs, which could push up inflation expectations, he noted.
The dollar index, which measures the greenback against six major currencies, rose 0.14 per cent to 98.99. Brent crude futures were also up 0.49 per cent, trading at USD 62.98 per barrel.
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Traders believe investors are acting cautiously amid ongoing trade tensions with the US, expecting some clarity only by year-end. “It seems that until the trade deal comes, we may see the rupee weaken further, and it may reach the levels of 91.00 soon. With a weak rupee, we do not expect the RBI to cut rates on Friday,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, told PTI.
He added that investor attention is now firmly on RBI Governor Sanjay Malhotra’s address on December 5. The six-member rate-setting panel, led by Malhotra, will announce its decision on Friday amid falling inflation, rising growth numbers, a weakening rupee, and global geopolitical tensions.
In domestic markets, the Sensex rose 45.99 points to 85,152.80, while the Nifty gained 14.35 points to 26,000.35 in early trade. Foreign institutional investors sold equities worth Rs 3,206.92 crore on Wednesday, according to exchange data.
