As Ukraine's geopolitical unpredictability increases, international investors look for a safe haven. Weak company results were the driving force behind the domestic sell-off.The Indian rupee fell eight paise against the US dollar on Thursday, reaching its lowest point ever at 84.50. A significant sell-off in domestic equity markets and rising crude oil prices in the face of geopolitical uncertainty caused the currency to decline.
The rupee began the day at 84.41 versus the US dollar and fell as low as ever during the afternoon, reaching 84.51. News agency PTI stated that the session closed at 84.50 versus the dollar, above its record low of 84.46 on November 14.
The rupee began the day at 84.41 versus the US dollar and fell as low as ever during the afternoon, reaching 84.51. News agency PTI stated that the session closed at 84.50 versus the dollar, above its record low of 84.46 on November 14.
As tensions between Russia and Ukraine escalate, foreign investors continue to purchase US dollars as a safe haven, according to forex traders. The Indian rupee's problems were exacerbated by the ongoing outflow of foreign cash.
By the end of December, we anticipate that the rupee will be trading at about 84.5 versus the US dollar. In the short term, FPI outflows from Indian markets are probably going to continue due to the depreciating bias that a strong dollar continues to produce for currencies worldwide. Rajani Sinha, Chief Economist at CareEdge Ratings, told PTI that the Reserve Bank of India's (RBI) actions, bolstered by the country's robust foreign exchange reserves, should assist control rupee volatility.
After a record USD 11 billion outflow in October, Foreign Portfolio Investors (FPI) withdrew almost USD 4 billion from Indian markets in November.
These withdrawals have been facilitated by rising US Treasury yields and a strengthening dollar. Additional domestic variables include high valuations and poor business profitability.
According to Jateen Trivedi, a research analyst at LKP Securities, the sell-off in domestic markets was partly fueled by the accusations made against the Adani Group by the US government.
FIIs sold shares worth ₹5,320.68 crore on Thursday, making them net sellers in the capital markets, according to data from the exchanges.
The 30-share Nifty fell 168.60 points, or 0.72 percent, to close at 23,349.90 points, while the 30-share BSE Sensex down 422.59 points, or 0.54%, to conclude at 77,155.79 points.
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