The Indian Rupee fell to a record low of Rs 77.41, dropping 51 paise against the US dollar in early trade on Monday. The previous record low was Rs 76.9812 in March.
The Rupee opened at 77.17 against the American dollar, then lost ground to quote at 77.42, registering a fall of 52 paise from the last close at the interbank foreign exchange.
The reasons behind the fall of the Rupee reportedly are the demand for riskier assets and because the foreign investors continue to dump the domestic stocks.
According to reports, foreign funds have pulled out $17.7 billion from Indian equities this year, the highest on record, as the prospect of aggressive tightening by global central banks roiled markets.
The widening current account deficit and a surge in global crude prices have resulted in the crash of the Indian Rupee.
“The RBI’s recognition of the need for urgency in normalising policy is a source of support,” BNP Paribas strategists Siddharth Mathur and Chidu Narayanan wrote in a note. “However, as equity flows can dominate interest-rate sensitive flows, there is a high downside risk to the INR from a deterioration in equity market sentiment as a result of a rapid tightening in domestic financial conditions.”
Also, the investors are reportedly worried that the broader Asian stocks could decline further due to the tightening COVID lockdown in Shanghai, which could hit global economic growth.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.35 per cent higher at 104.02, tracking rising US yields and fears about higher interest rates.
