New Delhi – The Indian rupee is continuously weakening against the dollar. On Monday, in early trade, it fell by 1 paisa to Rs 84.38 per dollar. This is its lowest level so far. the Reserve Bank of India (RBI) has been compelled to take measures to stabilize the currency amidst foreign investor sell-offs, equity market fluctuations, and global economic dynamics.
Why is the rupee falling?
According to currency market experts, the rupee is weakening due to the continuous selling by foreign investors and the sluggishness of the equity market. They say that until the dollar index softens or foreign funds reduce their withdrawals, the rupee will remain under pressure.
The rupee fell 5 paise to a new all-time low of 84.37 against the US dollar on Friday. It registered a decline for the third consecutive trading session.
In the medium term, the rupee will trade in the range of 83.80 to 84.50, as the Reserve Bank can curb the fall of the rupee due to sufficient foreign exchange reserves with it.
Since when has the rupee been under pressure?
The rupee has been under pressure for a long time amid the US elections and continuous withdrawal of foreign funds. Foreign investors sold equities worth about $12 billion in October. This trend continues in November as well. They have withdrawn about $1.6 billion in the first 10 days of November itself.
Amit Pabari, Managing Director, CR Forex Advisors, says that the Indian stock market valuation is quite high. Also, the quarterly results of companies are coming out very weak, which do not support high valuations.
How much did foreign investors withdraw
According to stock market data, foreign institutional investors (FIIs) sold shares worth Rs 3,404.04 crore on Friday. Foreign investors had invested Rs 57,724 crore in September 2024. But, they made a net withdrawal of Rs 94,017 crore in October. This was their highest selling so far.
If we talk about November, then foreign investors have withdrawn Rs 20 thousand crore in the last five trading sessions itself. According to experts, the selling of foreign investors may continue further. In such a situation, there will be instability in the rupee and the stock market.
Foreign exchange reserves also declined
RBI had said on Friday that India’s foreign exchange reserves fell by $2.675 billion to $682.13 billion in the week ending November 1. Last week, the total exchange reserves fell by $3.463 billion to $684.805 billion. At the end of September, the exchange reserves had reached an all-time high of $704.885 billion.
However, due to weakness in the rupee, the foreign exchange reserves are declining. In such a situation, pressure is also increasing on RBI to take steps to stop the fall in the rupee. However, experts believe that RBI can make a strategy of reducing the value of the rupee to keep it competitive against the Chinese currency Yuan.
