On Tuesday, the Indian rupee slumped to a record low, crossing the 91 mark against the US dollar for the first time. The currency’s decline continued,
hitting successive all-time lows amid persistent foreign fund outflows and ongoing trade-related uncertainties. Over the past 10 trading sessions, the rupee has depreciated from 90 per dollar to 91, losing nearly 1 per cent against the US dollar in just the last five sessions. At around of 11:40 am, the rupee was trading at 91.075 against the greenback. Meanwhile, earlier in the day, the Indian rupee fell 9 paise to 90.87 against the US dollar, pressured by ongoing foreign institutional investor (FII) outflows and delays in the India-US trade negotiations. However, a softer US dollar and a drop in global crude prices limited further declines in the domestic currency, forex traders noted. At the interbank foreign exchange, the rupee opened at 90.87, down 9 paise from Monday’s close, and fluctuated within a narrow range of 90.77-90.87 during early trading hours. On Monday, the rupee closed at a previous record low of 90.78 against the US dollar, losing 29 paise over the prior session. The persistent uncertainty surrounding the India-US trade deal and steady FII outflows were key factors behind the decline. "The US-India trade deal still seems to be off by a distance with the Commerce Secretary saying the first phase will be signed before the end of the year and news that we are closest to the deal being signed. The uncertainty has clouded the recovery on the USD/INR pair as the rupee opened lower with dollar buying happening every day," said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, as per a PTI report. Trade Deficit Narrows, But Pressure Remains Even though India’s trade deficit narrowed to a five-month low of $24.53 billion in November, the rupee struggled to recover. Exports rose 19.37 per cent to $38.13 billion, led by engineering and electronics shipments, while imports fell 1.88 per cent to $62.66 billion due to lower inflows of gold, crude, coal, and coke. Meanwhile, FIIs offloaded equities worth Rs 1,468.32 crore on Monday, intensifying pressure on the domestic currency. Market Sentiment and Inflation Trends Wholesale price inflation stayed negative for the second consecutive month at (-) 0.32 per cent in November, despite rising food prices like pulses and vegetables. For context, WPI-based inflation was (-) 1.21 per cent in October and 2.16 per cent in November 2022. The dollar index, which tracks the greenback against six major currencies, fell 0.03 per cent to 98.27, while Brent crude futures dropped 0.61 per cent to $60.19 per barrel. Domestic equities also faced early losses, with the Sensex down 363.92 points to 84,849.44 and Nifty declining 106.65 points to 25,920.65.
