Rupee Hits Record Low of ₹94.05 Against US Dollar Amid FII Outflows

The Indian rupee depreciated by 29 paise to close at a record low of ₹94.05 (provisional) against the US dollar on Wednesday. The decline was driven by sustained foreign institutional investor (FII) outflows and ongoing geopolitical tensions in West Asia.

Despite supportive cues such as a weaker dollar and falling crude oil prices, the local currency remained under pressure. The movement reflects continued volatility in the foreign exchange market amid external uncertainties.

Rupee Movement and Trading Range

At the interbank foreign exchange market, the rupee opened at ₹93.94 against the US dollar. It traded within a range of ₹93.86 to ₹94.08 during the session.

The currency eventually settled at its all-time low of ₹94.05, marking a sharp decline from the previous close. On Tuesday, the rupee had already weakened by 23 paise to close at ₹93.76, indicating a continuing downward trend.

Impact of FII Outflows and Geopolitical Risks

Foreign institutional investors remained net sellers in the equity markets, adding pressure on the rupee. Data showed that FIIs sold equities worth ₹8,009.56 crore on a net basis on Tuesday.

Persistent outflows typically lead to increased demand for the US dollar, weakening the domestic currency. Additionally, geopolitical tensions in West Asia have heightened risk aversion among global investors, further impacting capital flows.

Global Cues and Commodity Trends

The dollar index, which measures the strength of the US dollar against a basket of six currencies, was down 0.17% at 99.26. A weaker dollar generally supports emerging market currencies, but this effect was limited in the current scenario.

Meanwhile, Brent crude prices declined by 4.33% to USD 99.97 per barrel in futures trade. Lower crude prices usually ease pressure on India’s import bill, but did not offset broader market concerns.

Domestic Equity Market Performance

Domestic equity markets showed strong gains despite currency weakness. The BSE Sensex rose by 1,205 points, or 1.63%, to close at 75,273.45. The NSE Nifty also advanced by 394.05 points, or 1.72%, to settle at 23,306.45.

Positive equity sentiment indicates selective investor confidence, although it did not translate into support for the rupee. The divergence highlights differing dynamics between equity and currency markets.

Read More: Cabinet Clears Bill to Amend FCRA For Tighter Monitoring of Foreign Funding.

Conclusion

The rupee’s fall to a record low of ₹94.05 reflects the impact of external pressures, particularly FII outflows and geopolitical tensions. Supportive global cues such as weaker crude prices and a softer dollar were insufficient to stabilise the currency.

Continued volatility in capital flows and global developments remains a key factor influencing exchange rate movements. The development underscores the sensitivity of the rupee to both domestic and international factors.

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