The rupee fell 39 paise to close at an all-time low of 95.23 (provisional) against the US dollar on Monday (May 4), as ongoing tensions in the Middle East triggered volatility in global markets, kept oil prices elevated, and heightened concerns over inflation and an economic slowdown.
Forex traders said Brent crude, hovering near USD 110 per barrel, continues to exert pressure on oil-importing economies such as India. Unabated foreign capital outflows amid rising geopolitical uncertainty further dented investor sentiment.
At the interbank foreign exchange market, the rupee opened at 94.95 against the US dollar, weakened through the session, and finally settled at 95.23 (provisional), down 39 paise from its previous close of 94.84 on Thursday. Stock and currency markets were closed on Friday for Maharashtra Day.
“The Indian rupee has hit a record low as the dollar strengthened and crude oil prices remained firm. This sustained rise in oil prices, coupled with foreign fund outflows, is putting visible strain on India’s trade balance and the broader economy. Persistent dollar demand is expected to keep pressure on the rupee in the short term, pushing USD/INR towards the 95.35 and 95.70 levels,” said Dilip Parmar, Senior Research Analyst at HDFC Securities.
Meanwhile, the dollar index, which measures the greenback against a basket of six currencies, was trading 0.11 per cent higher at 98.26. Brent crude, the global benchmark, rose 1.37 percent to USD 109.65 per barrel in futures trade.
Investors also tracked the counting of votes in the West Bengal state elections. According to IFA Global, “a BJP victory would be positive for domestic assets. However, the impact is likely to be short-lived as global geopolitics will remain the dominant driver, given its direct impact on supply chains and industry.”
On the domestic equity front, the Sensex rose 355.90 points to close at 77,269.40, while the Nifty gained 121.75 points to settle at 24,119.30. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 8,047.86 crore on Thursday, as per exchange data.
Meanwhile, Expenditure Secretary V Vualnam on Friday said the coming quarters and the next year could see “a lot of stress points”.
“The fiscal stress is indeed very much a reality, but at the same time, capex will remain a priority item, which we would like to preserve and ensure continues at the budgeted level,” Vualnam said at the ICPP Growth Conference organised by Ashoka University.
(With inputs from PTI)
