The Indian rupee dropped to a record low of ₹84.11 against the US dollar on Monday, surpassing its previous low of ₹84.0950 from last week. This decline highlights continued selling pressure on the rupee, even as other Asian currencies rose slightly on a weaker dollar, showing mixed regional currency trends.
Persistent outflows from Indian equities have been a major factor impacting the rupee, as foreign investors pulled funds from local markets. While most Asian currencies benefited from a weaker US dollar, the rupee struggled to hold ground amid ongoing stock market volatility and reduced investor confidence.
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The US dollar index dipped by 0.2% to 103.7, likely affected by the unwinding of long positions ahead of the upcoming US presidential election results. This dip provided a lift to other Asian currencies, but the Indian rupee continued to face downward pressure, highlighting divergent currency movements within the region.
On the equity front, the BSE Sensex and Nifty 50 indices declined around 1.5% each, as investors remained cautious ahead of the US election. Concerns about foreign selling added to market caution, pulling the indexes down nearly 9% from their record highs achieved in late September.
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Foreign investors have taken a more cautious stance, selling over $11 billion in Indian equities throughout October, significantly impacting market sentiment. Additionally, foreign lenders and overseas investors cut their holdings in Indian government bonds, marking the first decline in bond holdings since April.
The combination of foreign equity outflows, tepid earnings results, and global economic uncertainty has added pressure on the rupee and the stock market, creating a challenging environment for Indian financial assets. This broad-based selling reflects investor caution amid domestic and international factors influencing market trends.
