The Indian rupee fell 27 paise to hit an all-time low of 86.31 against the US dollar during early trade on Monday. At the interbank foreign exchange market, the rupee opened at 86.12 and slid further in initial deals. This decline follows an 18-paise drop on Friday, which brought the rupee to 86.04, breaching the 86-mark for the first time in its history.
The dollar index, which tracks the strength of the US dollar against a basket of six major currencies, rose 0.22% to 109.72, its highest level in two years. The rise was driven by stronger-than-expected US non-farm payroll data, which supported elevated 10-year US treasury yields at 4.76%, the highest level since October 2023.
Global crude oil prices surged, with Brent crude futures rising 1.44% to USD 80.91 per barrel. The sharp increase in crude prices has intensified concerns over India’s trade deficit, as the country is heavily dependent on oil imports. Higher import costs add pressure on the rupee and the overall balance of payments.
Foreign institutional investors (FIIs) pulled out ₹2,254.68 crore from Indian equities on Friday, contributing to the decline in domestic markets. The benchmark BSE Sensex dropped 550.49 points, or 0.71%, to close at 76,828.42, while the Nifty fell 182.45 points, or 0.78%, to end at 23,249.05. Both indices have seen consistent declines over the past three trading sessions amid weak investor sentiment.
India’s foreign exchange reserves fell by USD 5.693 billion to USD 634.585 billion for the week ending January 3, according to the Reserve Bank of India. Analysts anticipate further rupee volatility driven by global factors, including crude oil prices, US treasury yields, and foreign fund flows. The USD-INR pair is likely to trade in the range of 85.80 to 86.15 in the near term, with potential central bank interventions to stabilize the currency.