Indian Rupee plunges to all-time low of 85.12

On 19 Dec 2024 17:17:30

The Indian rupee fell 18 paise to an all-time low of 85.12 against the US dollar on the National Stock Exchange (NSE) on Thursday

The Indian rupee fell 18 paise to an all-time low of 85.12 against the US dollar on the National Stock Exchange (NSE) on Thursday, following the Federal Reserve’s hawkish outlook on rate cuts. In its meeting on Wednesday, the Federal Open Market Committee (FOMC) shifted focus towards maximum employment and price stability, reducing the number of rate cuts anticipated for 2025.

robust rally in the US dollar, pushing the dollar index past the 108 level and pressuring global currencies, including the Indian rupee. The Indian currency, which had closed at 84.94 against the dollar in the previous session, opened weaker at 85.06. Factors such as subdued domestic equity markets, demand for dollars from importers, and foreign capital outflows contributed to the negative sentiment.

"The dollar index breaching 108 and the 10-year US bond yield rising to 4.52percent are adverse developments for FII fund flows into India. However, these impacts are likely to be transitory," said market experts. The US Fed’s decision also led to a significant downturn in US stock markets. The Dow Jones Industrial Average plunged 2.58 percent to close at 42,326.87, the S&P 500 dropped 2.95 percent to 5,872.20, and the Nasdaq tumbled 3.56 percent to finish at 19,392.69.

On the institutional front, Foreign Institutional Investors (FIIs) sold Indian equities worth Rs 1,316.81 crore on December 18, while Domestic Institutional Investors (DIIs) purchased shares worth Rs 4,084.08 crore. The rupee's depreciation highlights concerns over India's foreign exchange position amid global economic volatility. Analysts suggest that continued scrutiny of US monetary policy and global economic trends will shape the rupee's trajectory in the coming weeks.