Mumbai: Rupee plunged 14 paise to close at an all-time low of 87.57 (provisional) against the US dollar on Thursday, as rising odds of a rate cut by the Reserve Bank of India in its monetary policy meeting on Friday pressurised the rupee. Forex traders said the Indian rupee plunged to fresh record lows amid weak domestic markets and importer demand for dollars.
Moreover, risk aversion in global markets amid ongoing uncertainty over US trade tariffs may further weigh on the rupee. At the interbank foreign exchange, the rupee opened at 87.54 and slipped further to an all-time intraday low of 87.60 against the greenback in initial deals. The domestic unit finally settled for the day at 87.57 (provisional) against the greenback, registering a plunge of 14 paise from its previous close.
On Wednesday, the rupee plunged 36 paise to close at an all-time low of 87.43 against the US dollar. The local unit has lost over 2 per cent so far this year. The sharp drop in the domestic unit comes after nearly a 3 per cent fall in the USD/INR pair in 2024, making it one of the worst-performing Asian currencies.
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On January 1, 2024, the rupee was at 83.21 against the greenback. The rupee has lost 193 paise so far this year. The domestic unit was quoted at 85.64 against the greenback on January 1, 2025.
Forex traders said the rupee is trading with a negative bias over the global trade war as market participants mulled the impact of tariffs being imposed by the United States and China.
"We expect the rupee to trade with negative bias amid weak domestic markets and importer demand for dollars. Risk aversion in global markets amid ongoing uncertainty over US trade tariffs may further pressurise the rupee. However, any intervention by the RBI may support the rupee at lower levels," said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.
Choudhary further noted that investors may remain cautious ahead of the RBI's monetary policy meeting decision and US non-farm payrolls data on Friday. "USD-INR spot price is expected to trade in a range of 87.30 to 87.90," Choudhary added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.40 per cent higher at 108.00.
Brent crude, the global oil benchmark, rose 0.52 per cent to USD 75.00 per barrel in futures trade. Additionally, weak PMI data signalled a slowdown in economic activity. India's services sector activity expanded at the slowest pace in over two years in January amid softer increases in sales and output. The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 59.3 in December to 56.5 in January -- its lowest level since November 2022.
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The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) began its three-day meeting on Wednesday. The MPC will announce its policy decisions on February 7.
In the domestic equity market, the 30-share BSE Sensex was trading 213.12 points, or 0.27 per cent, lower at 78,058.16 points, while the Nifty was down 92.95 points, or 0.39 per cent, at 23,603.35 points.
Foreign institutional investors (FIIs) offloaded equities worth Rs 1,682.83 crore in the capital markets on a net basis on Wednesday, according to exchange data.
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