NewKerala.com

Rupee's Sharp Fall: Why FII Outflows and RBI Silence Raise Concerns

The Indian rupee continued its downward slide, opening weaker and staying firmly above the 90-per-dollar mark. This pressure is largely driven by ongoing foreign investor selling and uncertainty around trade deals. Interestingly, the Reserve Bank of India has held back from major market intervention, which analysts say adds to the currency's weakness. While near-term sentiment is cautious due to these outflows, experts believe India's strong economic fundamentals will support a recovery in the medium term.

Key Points: Rupee Slides Above 90 vs Dollar Amid FII Outflows and RBI Inaction

  • Rupee opened weaker at 90.41 against the dollar, extending its sharp decline from the previous session
  • Persistent foreign institutional investor selling is a key pressure point, with FIIs offloading Rs 3,692 crore
  • The Reserve Bank of India has so far refrained from heavy intervention in the currency market
  • Domestic indices also opened lower, influenced by the weekly F&O expiry and muted sentiment
  • Despite near-term pressures, analysts cite robust economic growth as a positive mid-term factor
2 min read

Rupee opens lower as FII outflows continue

The Indian rupee hits a new low above 90 per dollar as foreign investors sell off equities and the RBI refrains from heavy intervention, raising market concerns.

"The currency has been under pressure due to persistent equity outflows and the lack of clarity around the India-US trade deal. - Market Experts"

Mumbai, Dec 4

The Indian rupee continued its sharp fall on Thursday, sliding 22 paise and remaining well above the 90-per-dollar mark amid weak global cues.

The currency has been under pressure due to persistent equity outflows and the lack of clarity around the India-US trade deal, according to market experts.

The rupee opened weaker at 90.41 against the US dollar, compared to its previous close of 90.19. This decline came just a day after the rupee breached the psychologically important 90 mark for the first time on December 3, when it hit a new all-time low.

Despite the steep fall, the Reserve Bank of India has so far refrained from heavy intervention, which analysts say is contributing to the pressure on the currency.

Experts believe the central bank may address the rupee’s recent weakness in its upcoming monetary policy announcement. However, they also expect the RBI to avoid giving any specific comfort levels or targets for the currency, even as depreciation concerns grow.

Meanwhile, Indian domestic indices opened lower as continued foreign investor selling kept sentiment muted on Dalal Street. Analysts said that the opening also coincided with the weekly F&O expiry for the Sensex, adding to the cautious mood among traders.

Foreign institutional investors (FIIs) extended their selling streak for the third consecutive session on December 3, offloading equities worth Rs 3,692 crore. Meanwhile, domestic institutional investors (DIIs) continued their steady accumulation, purchasing Rs 4,730 crore during the same session.

The positive factor is India’s improving fundamentals - robust economic growth, low inflation, supportive monetary and fiscal policies and indications of steadily improving corporate earnings, according to market watchers.

They added that it is important to understand that the negative factor may weigh on the market in the near-term, but the positive factor will dominate in the mid-term enabling the market to resume its upward journey.

- IANS

Share this article:

Reader Comments

P
Priya S
Good time for IT and export sectors, but bad for everything else. My mutual funds are taking a hit with this FII selling. Hope DIIs continue to support the market. Long term, I'm bullish on India's growth story 🇮🇳
R
Rohit P
The 90 mark was always a psychological barrier. Once it's broken, the slide can be fast. RBI's silence is surprising. They should at least make a statement to calm the markets. Global cues are weak, but our domestic story is solid.
S
Sarah B
Watching from the US. The India-US trade deal uncertainty is a big factor here. Once that gets clarity, you'll see FII flows reverse. The outflows are a temporary reaction, not a reflection of India's potential.
V
Vikram M
Respectfully, the RBI's approach of minimal intervention might be the right one. Using forex reserves to defend a specific level is a losing battle. Let the currency find its natural level based on fundamentals. The article itself says DIIs are buying aggressively, which is a great sign.
K
Kavya N
Petrol prices are going to increase again 😔 This directly affects the common man's budget. While experts talk about macros, for my family, a weaker rupee means cutting down on monthly expenses. Hope things stabilize soon.
M
Michael C

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50