The Indian rupee has suffered a major setback in the currency market. Unable to withstand the strength of the US dollar, it fell flat on Tuesday. Due to the huge strengthening of the rupee in the foreign market and foreign investors withdrawing money from the Indian market, it has come to its lowest level ever. The rupee fell 32 paise to 89.85 per dollar in early trade on Tuesday. This historic fall in the rupee is a matter of concern not only for economists but also for the common man, because it has a direct impact on the country’s economy and inflation.
Rupee at record low
There was activity in the interbank foreign exchange market since morning. Rupee started trading at 89.70 against US dollar. However, as the day progressed, demand for dollars increased. Heavy dollar buying by importers, big companies and foreign banks put pressure on the rupee. As a result, the rupee fell by 32 paise from its previous closing price. The rupee, which closed at 89.53 per dollar on Monday, fell to a record low of 89.85 today. Forex dealers say that the rupee has weakened due to shortage of dollars and high demand in the market.
Foreign investors withdrew money
The effect of this weakening of rupee was clearly visible on the domestic stock market also. Both Sensex and Nifty came under pressure. In early trading, BSE Sensex fell 223.84 points or 0.26 percent to 85,418.06. NSE Nifty was also trading at 26,116.75, slipping 59 points.
According to stock market data, Foreign Institutional Investors (FIIs) are selling in the Indian market. On Monday alone, foreign investors sold shares worth a net ₹1,171.31 crore. When foreign investors withdraw their funds and convert them into dollars, pressure on the rupee increases. Meanwhile, the dollar index, which measures the dollar’s strength against six major currencies, is steady at 99.41. However, there is some relief on the crude oil front, with Brent crude trading around $63.15 per barrel.
This step of RBI will strengthen the rupee.
Market experts and experts believe that this sharp fall in the rupee is mainly due to daily selling by Foreign Portfolio Investors (FPIs). Apart from this, NDF expiry covering is also being considered a factor. Experts say that speculators put pressure on the rupee due to lack of special support from the Reserve Bank of India (RBI).
According to a Reuters report, the level of Rs 90 is like a psychological Lakshman Rekha. It is suspected that RBI intervened and sold dollars to prevent the rupee from falling below the 90 level. If this decline continues, imports may become expensive in the coming days, which may have a direct impact on the prices of everything from petrol-diesel to mobile phones.
