Indian Rupee touches record low of 87.57 against US Dollar
What's the story
The Indian Rupee has plunged 14p to a record low of 87.57 against the US Dollar today.
The fall comes amid market expectations of an impending rate cut by the Reserve Bank of India (RBI) and poor economic data.
The Rupee's fall is also aggravated by continued foreign fund outflows and a slump in domestic equities amid weak risk appetite.
Market dynamics
Dollar index trading higher
The dollar index, which gages the US currency's strength against six other major currencies, was trading 0.11% higher at 107.69. Meanwhile, Brent crude oil prices rose marginally by 0.13% to $74.71 per barrel in futures trade, putting pressure on the Indian currency.
Economic impact
Economic indicators and market reactions
The INR continues to trade with a negative bias as foreign banks are buying Dollars in large quantities and importers are rushing to secure Dollars fearing further depreciation amid global uncertainty.
Weak PMI data indicating slowdown in economic activity has also added to the currency's woes.
Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, said widespread stoplosses were triggered further exacerbating the currency weakness.
Sector performance
Services sector activity and investor concerns
India's services sector activity expanded at its slowest rate in over two years in January due to softer increases in sales and output.
The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 59.3 in December to 56.5 in January, its lowest since November 2022.
Bhansali noted that significant Dollar buying by foreign banks and oil companies contributed to the Rupee's weakness, invoking investor concerns.