The rupee opens at a record low of 83.78 against the US dollar

On Monday, the Indian rupee started at a record low against the US dollar, driven by concerns that the risk aversion due to the potential US recession might result in foreign outflows. The rupee opened at 83.78 per dollar, up from its previous close of 83.75, and fell below the lifetime low of 83.7525 reached on Friday.”

The dollar index, which evaluates the US dollar concerning a group of currencies that includes the euro and the yen, fell by 1.15% to 103.22.

In response to a decline in Asian markets, the key Indian stock market indices, the Sensex and Nifty 50, commenced Monday’s trading session sharply lower.

Global equities plummeted, with a severe selloff seen in both the US and Asian markets as investors piled into US Treasuries over fears of a US recession spurred by the dismal US jobs report. 

The rupee was also affected by concerns about outflows of foreign capital from emerging markets like India.

“In the short term, he anticipates the rupee will trade within the range of 83.75 to 83.90.”

According to provisional data available on the exchanges, on Friday, foreign institutional investors (FIIs) net-sold Indian shares worth ₹3,310 crore, while domestic institutional investors (DIIs) net-bought shares worth ₹2,965.94 crore.

“The Indian rupee has largely stayed below the 83.70 level despite a weakening US dollar, which saw the dollar index drop to around 103. At the same time, the Chinese yuan appreciated by 1.5% and the Japanese yen rose by over 4% against the dollar, both of which are positive for the rupee. Additionally, oil prices corrected by 11%, which is beneficial for the rupee given that India is the world’s second-largest oil importer. The rupee hasn’t gained, nevertheless, despite these advantageous circumstances, most likely because the Reserve Bank of India controls its movement, according to Amit Pabari, Managing Director at CR Forex Advisors.

He anticipates that the rupee will trade between 83.75 and 83.90 soon.

“In the global currency markets, Japan’s yen gained nearly 1% to reach 145.11 per dollar, after earlier hitting its highest level since mid-January at 144.76 during the session.”

The unwinding of yen-funded carry trades and the Bank of Japan’s interest rate hike last week have contributed to the yen’s 10% advance against the dollar in less than three weeks.

Fears of a US recession raised hopes for a significant September rate decrease by the US Federal Reserve.