Rupee Falls Beyond 84 Against US Dollar as FPIs Exit Equities and Oil Prices Surge

Rupee Falls Beyond 84 Against US Dollar as FPIs Exit Equities and Oil Prices Surge

The Indian rupee breached the 84-mark against the US dollar, hitting a record low amid rising foreign portfolio investor (FPI) outflows from domestic equities and increasing Brent crude oil prices driven by ongoing tensions in West Asia. By 12:00 PM IST, the rupee was trading at Rs 83.05 per dollar.

Market sentiment was further impacted by higher-than-expected US Consumer Price Index (CPI) data, which came in at 2.4% versus an anticipated 2.3%. Though the CPI is at its lowest since September 2021, a slight increase in core inflation, rising to 3.3%, surprised traders. This dampened expectations for a 50 basis points rate cut by the US Federal Reserve in December.

The Reserve Bank of India (RBI) intervened in the foreign exchange market, selling dollars to limit the rupee's depreciation. "The rupee hit a new low as foreign investors continue buying dollars while the RBI sells them," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.

Adding to the rupee's challenges, Brent crude oil surged to $79.18 per barrel, supported by supply concerns from the ongoing Middle East conflict, potential strikes on Iran’s oil facilities, and disruptions from Hurricane Milton. China's pro-growth measures also contributed to a stronger demand outlook, driving prices higher.

"The RBI is active in the market, and we expect the rupee to trade between Rs 82.90 and Rs 83.15 per dollar today," a dealer from a state-owned bank stated.