Indian Rupee Plunges to All-Time Low Against USD: Factors Driving the Slump?

  • Investing.com
  • Forex News
Indian Rupee Plunges to All-Time Low Against USD: Factors Driving the Slump?
Credit: © Reuters.

By Malvika Gurung

Investing.com -- The Indian rupee fell to an all-time low against the US dollar on Monday, as the US Treasury yields surged, in response to the Federal Reserve’s 50 bps rate hike last week to tame the multi-year high inflation.

Investors feel that the rate hike is not enough to control the soaring inflation and expect further aggressive monetary tightening by the central bank, spooking markets globally.

The domestic currency opened at an almost $77/$1 level and slipped to a historic low of 77.42 compared to 1 USD on Monday, with the greenback strengthening in the overseas market, along with a sharp sell-off in the domestic market and foreign investors continuing their sell-offs for the eighth straight month in May.

The outlook on the rupee has been bleak since the start of the Russia-Ukraine war that led to flying crude oil prices.

As interest rates in the US rise, foreign investors begin to flee from emerging markets like India.

Major global factors contributing to the rupee-slump include the Russia-Ukraine geopolitical tensions, rising crude oil and commodity prices, a stronger greenback, interest rate hikes by central banks, including an off-cycle RBI MPC meet last week, relentless FPI withdrawals, and an economic slowdown.

In the first four sessions in May, FPIs have debited Rs 6,400 crore from Indian shares and offloaded equities worth Rs 1.65 lakh crore in seven months until Apr 2022.

Read Also: FPIs Debited Rs 6,400 Cr in 4 Sessions in May: Factors Driving the Sell-Off?

Indian equity benchmark indices Nifty50 and Sensex made a gap-down opening in the session, and were trading 0.81% and 0.83% lower, respectively, at 11:38 am, while Nifty Bank declined 1.16%.

Read Also: Market Opening: Sensex Tanks 794 Pts, RIL Plunges 3%; 49/50 Nifty Stocks in Red

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or

100
  • Gurpreet Panesar @Gurpreet Panesar
    Hopeless RBI & Hopeless Govt Policies
    Like 0
  • Indranil Ghosh @Indranil Ghosh
    RBI is not only HOPELESS. They do fake Promise & Help foreign Investor selling Indian Property.
    Like 0
  • Vikram Wagh @Vikram Wagh
    Ye 80₹ tak jayega. Hopeless RBI
    Like 2
    • Ashok Pareek @Ashok Pareek
      @Vikram Wagh Yes agree with your view on INR. It seems to be overvalued and was getting some protection cover from robust FDI.
      Like 0
    • Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

      Error: File type not supported

      Drop an image here or

      100

Related Articles