MUMBAI: The rupee is a whisker away from breaching the psychological 92-per-dollar mark, having plunged to a fresh lifetime low of 91.99 on Friday. The currency was weighed down by a sharp selloff in equity markets, which extended losses to four of the five trading sessions this week, along with month-end dollar demand from importers and heavy dollar outflows from equities.
Analysts are now seeing the rupee at well below 92 sooner than later.
The battered rupee began the day low losing 20 paise from Thursday close of 91.58 but by afternoon trade was a bad patch and plunged to 91.99. At that level RBI began selling dollars leading a mild recovery and the currency closed the session at 91.88, down 30 paise from the previous close.
The rupee is now down more than 1% this week and 2% this month so far which comes on top of the near 5% cut it had taken in 2025. With this the rupee has lost nearly 60% of its value since this came to power in May 2014 promising that if voted to power, the rupee would be made so strong that each rupee will fetch a dollar!
Dilip Parmar, research analyst at HDFC Securities said, "the rupee fell to a record low, bucking under the weight of dollar demand from importers and corporates ahead of the long weekend and the upcoming budget.
“This fragility intensified as domestic equities faced a fresh bout of liquidation, erasing Thursday’s tentative recovery. The outlook for spot dollar-rupee pair remains resolutely bullish; we anticipate the pair may eclipse the psychological 92 threshold while find the support at 91.10."
According to Jateen Trivedi, VP research analyst -- commodity and currency at LKP Securities, "the rupee traded weak by 0.30 paise at 91.90 as persistent FII selling in the secondary markets continued to weigh on the currency. The rupee is expected to remain under pressure in the near term, with a weak trading range of 91.35–92.25."
The rupee is weighed down by demand from bullion and other importers, speculative dollar buying by offshore players and foreign outflows from equities, traders said, who added had it not been RBI intervention the unit would have crossed the 92-mark.
Foreign investors have pulled out close to $3.5 billion from equities till Thursday, pushing the Nifty down nearly 5% in the month. They had ripped the market over $18.9 billion off last year. The selling has intensified this week, with the index down more than 3%, reinforcing pressure on the rupee.
The benchmark indices plunged 0.95% on Friday, weighed by the selloff in shares of Adani group companies after the US Securities and Exchange Commission asked a court for permission to personally summon to billionaire Gautam Adani.
“The Adani issue has added another reason for the market to buy into dollar/rupee," Anil Bhansali, head of treasury at Finrex Treasury Advisors, said, adding “you can see the pressure in the way buying keeps coming in at all levels."
Economists say capital flows remain a key vulnerability for the rupee. Portfolio equity outflows hit a record $18.9 billion last year and inflows through external commercial borrowings have been muted.
The Reserve Bank has intervened repeatedly to support the rupee and curb the pace of its decline, according to traders. While the central bank sold dollars aggressively on at least two occasions this week, the intervention has so far only slowed, rather than reversed, the currency’s downward trend. Gains in crude oil prices and a surge in US treasury yields also weighed on the rupee.