Rupee Hits Record Low Amid Dollar Surge and Weak Domestic Equities

The Indian Rupee hit an all-time low on Wednesday, weighed down by a stronger dollar and weakness in domestic equities.

Extent of the Fall
As of 3:29 PM, Bloomberg data indicated the Rupee’s value at 85.8562 per dollar.

Dollar’s Rise
The dollar index increased by 0.1%, driven by a drop in the Chinese yuan and a 0.4% decline in the Indonesian rupiah, according to a Reuters report.

Efforts to Limit Losses
Dollar sales by state-run banks provided some support to the Rupee but lacked significant aggression, the report noted.

Reasons for the Decline
The Rupee’s fall stemmed from the dollar strengthening due to the US Federal Reserve’s hawkish stance in December. Despite projecting a 50 basis point rate cut in 2025, investor sentiment reflects expectations of only a 38 basis point reduction.

Additionally, volatility in the Indian stock market exerted pressure on the currency. Both the BSE Sensex and NSE Nifty ended flat but remain in correction territory. Foreign investors have sold approximately $2 billion worth of equities and bonds this month, contributing to the Rupee’s depreciation.