Rupee hits record low of 85.84 vs $

MUMBAI: The rupee fell to a lifetime low on Monday, weakening to 85.84 against the dollar and surpassing its previous low of 85.81 recorded in late Dec. It ended the day at 85.83 – down six paise from Friday’s close of 85.77. A stronger dollar, tepid capital flows, and weak sentiment in the equity markets continued to weigh on the currency.
Despite RBI intervention through dollar selling, the rupee has remained under pressure. Traders said that RBI appears to be holding the rupee until the new US administration’s position on tariffs becomes clearer.
The dollar index – which measures the greenback against six currencies – slipped 0.3% to 108.5, retreating from a two-year high. After market hours, the dollar index retreated after reports that the US would impose tariffs only on critical imports. However, the dollar recouped losses after Fed governor Lisa Cook indicated a cautious approach to rate cuts due to inflation concerns, further supporting the dollar.
Equity markets also faced sharp declines. The sensex fell 1,258 points or 1.6% to 77,965, while Nifty dropped 389 points or 1.6% to 23,616. Foreign investors sold $1.1 billion in Indian stocks and bonds in Jan so far, according to data, reflecting weak market sentiment. FPIs offloaded Rs 4,227 crore on Friday alone.
Rising US bond yields and safe-haven demand for the dollar added to the rupee’s woes, compounded by concerns over an HMPV virus outbreak. Brent crude traded at $76.3 per barrel, down 0.3%, further pressuring emerging markets.
ING Bank has predicted the dollar index could soon touch 110. In the international markets, Japan’s yen led declines among group-of-10 currencies against the greenback, while the Australian and New Zealand dollars were the standout performers. China maintained its support for the yuan with the daily reference rate after the currency slumped past a key level on Friday.