Photo: KT File
The Indian rupee hit an all-time low on Monday, falling to 84.11 against the dollar, surpassing its previous record of 84.0950 set last week. This decline was driven by continuous outflows from local stocks, despite most Asian currencies benefiting from a weaker US dollar. The benchmark BSE Sensex and Nifty 50 equity indexes both dropped around 1.5% due to potential selling by foreign investors and caution ahead of the US presidential election results.
Persistent selling by overseas investors, coupled with a lackluster earnings season, has weighed heavily on local stocks, pushing the benchmarks down by about 9% from their record high in late September. Foreign investors have net sold over $11 billion of Indian equities in October, and they also reduced their holdings in government bonds last month for the first time since April. Foreign banks were observed bidding for dollars on Monday, possibly on behalf of custodial clients, according to traders.
Despite the downturn in equities, the Reserve Bank of India's (RBI) regular interventions have helped mitigate the rupee's decline, and the central bank is expected to continue defending the currency. Asian currencies generally strengthened on the day, with the dollar index slipping 0.2% to 103.7, possibly due to the unwinding of long positions ahead of the US election results. While the US election could significantly impact equities, the RBI is likely to maintain control over rupee volatility, according to a trader at a large private bank.
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