MUMBAI, Nov 21: The Indian rupee experienced its steepest single-day fall in over three months on Friday, breaching the 89-per-dollar mark for the first time and closing 93 paise lower at 89.61 (provisional) against the US dollar. The sharp decline was triggered by negative cues from both domestic and global equity markets, driven by trade uncertainties and a massive sell-off in global IT stocks amid risk-off sentiment. Analysts attributed the fall to heightened global volatility and the lack of clarity regarding the proposed India-US trade deal.
At the interbank forex market, the rupee opened at 88.67, hit an intra-day low of 89.65, and ended at 89.61. This marks the first time the rupee has crossed the 89 mark in its history. Previously, its all-time intra-day low was 88.85 on September 30, while the lowest closing was 88.81 on October 14. The last comparable single-day drop was on July 30, when the rupee lost 89 paise in a day.
Anindya Banerjee, Head of Research at Kotak Securities, said the decline reflects a spillover of global risk-off sentiment, including heavy selling in cryptocurrencies and AI-linked technology stocks. Uncertainty around the India-US trade deal has exacerbated market fragility, with no clear timeline for resolution.
Reserve Bank of India Governor Sanjay Malhotra clarified that the central bank does not target a specific level for the rupee. He said the depreciation reflects market demand for dollars, driven by trade uncertainties, particularly after US-imposed tariffs. Malhotra expressed confidence that a favorable trade deal with the US will eventually ease current account pressures.
Global cues also influenced the rupee’s performance. The dollar index rose 0.09% to 100.17, while Brent crude fell 2.18% to USD 62 per barrel. On the domestic equity front, the Sensex fell 400.76 points (0.47%) to 85,231.92, and the Nifty declined 124 points (0.47%) to 26,068.15. Foreign institutional investors bought equities worth Rs 283.65 crore on Thursday.
Government data showed that the growth in eight key infrastructure sectors remained flat year-on-year in October, with gains in petroleum refinery products, fertilisers, and steel offset by declines in coal and electricity. These sectors had grown 3.3% in September and 3.8% in October 2024, indicating a mixed performance in the industrial landscape.
Overall, the rupee’s historic fall reflects a combination of global market volatility, domestic equity pressure, trade uncertainty, and fluctuating demand for the dollar, signaling heightened market sensitivity to both international and domestic economic developments. (PTI)
