Indian Rupee Plunges to Historic Low Against US Dollar, Recovers Marginally
The Indian rupee experienced significant volatility on Friday, touching an unprecedented low of 92.02 against the US dollar before recovering slightly to close at 91.97. This represents a marginal gain of just 2 paise from Thursday's closing level of 91.99, which was itself a record low at that time.
Intraday Trading Patterns and Market Dynamics
At the interbank foreign exchange market, the rupee opened at 91.89 and initially showed strength, climbing to 91.82 during early trading hours. However, the currency soon reversed direction, plunging to its historic low of 92.02 before the session concluded with a modest recovery to 91.97. This marks the rupee's weakest performance against the dollar since January 23, when it previously touched 92-a-dollar.
Key Factors Driving Rupee's Performance
Forex traders identified multiple pressures affecting the Indian currency:
- Sustained foreign fund withdrawals from Indian markets
- Negative sentiment in domestic equities with both Sensex and Nifty declining
- Firm American currency amid geopolitical uncertainties
- Volatile global cues impacting emerging market currencies
Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, explained: "Indian rupee recovered from all-time lows on an overnight decline in crude oil and commodity prices. However, recovery in the US dollar index and FII outflows capped sharp gains. Dollar index rose after Donald Trump said that he would announce his nominee to head the US Federal Reserve."
Broader Market Indicators and Economic Context
Several parallel developments contributed to the rupee's challenging position:
- Dollar index strength: The gauge measuring the greenback against six major currencies rose 0.45% to 96.57
- Crude oil decline: Brent crude futures fell 0.96% to USD 70.03 per barrel, providing some relief
- Equity market pressure: Sensex dropped 296.59 points (0.36%) to 82,269.78 while Nifty fell 98.25 points (0.39%) to 25,320.65
- Foreign institutional outflows: FIIs sold equities worth ₹393.97 crore on Thursday
Economic Survey Insights and Long-term Concerns
The Economic Survey 2026, tabled in parliament on Thursday, highlighted concerning trends in India's currency performance. The document noted that the rupee is "punching below its weight" and expressed concern about "investor reluctance to commit funds to India" despite favorable conditions including controlled inflation and positive growth outlook.
This assessment suggests structural issues may be affecting the rupee's performance beyond immediate market factors, warranting deeper examination of India's economic positioning and investor confidence levels in global markets.
