Indian Rupee Hits Record Low Amid Strengthening Dollar and Economic Concerns

                                                

The Indian rupee fell by 9 paise, reaching an all-time low of Rs 85.83 against the US dollar on January 8. This marked a slight decline from the previous record low of Rs 85.77 hit on January 4, which was a 0.069% decrease. The rupee's depreciation is attributed to the strengthening US dollar and rising crude oil prices, coupled with a lack of significant market activity in the Indian equity market, which further pressured the currency.

The rupee's weakening trend started in late October 2024, coinciding with the US election campaign. Following Donald Trump's victory on November 5, expectations of stricter monetary policies from his administration added to the ongoing depreciation.

In early trade, the rupee opened at Rs 85.82 before slipping to Rs 85.83 against the dollar. Meanwhile, the dollar index rose by 0.09% to 108.48.

The Indian government's recent forecast of lower GDP growth for 2024-25, which is expected to drop to 6.4% from the previous 6.6% estimate, also contributed to the rupee's fall. This projected growth rate is the lowest since 2020-21 when the economy contracted by 5.8% due to the pandemic.

In the domestic equity market, the BSE Sensex dropped by 180.32 points, or 0.23%, to 78,018.79 points, while the Nifty fell by 47.35 points, or 0.20%, to 23,660.55 points. Additionally, foreign institutional investors (FIIs) sold off Rs 1,491.46 crore worth of Indian stocks on a net basis.