Rupee falls to 84.37 a dollar as foreign funds withdraw over $2.37 bn from Indian stocks in five days
11 Nov 2024
Foreign funds with huge cash piles, mainly those categorised as institutional investors, have been hammering the secondary market for equities by offloading stocks valued over Rs20,000 crore ($2.37 billion) in just five trading sessions.
The huge cash outflow that ensued brought down the value of the rupee to around 84.36 against the US dollar and the double whammy for the Indian economy is expected to continue as these funds are in no mood to end the selling spree.
The rupee fell to an all-time low of 84.37 against the US dollar in early trade on Friday (8 November 2024), weighed down by huge outflows of foreign funds.
Forex traders who depend on the rupees vulnerability to earn a living attribute several reasons to the rupeeās fall. According to them the rupee is losing against the dollar because of a rate cut by the Federal Reserve and the return to power of Donald Trump.
But the stock market has a different view. Marketmen expect the rupee to remain volatile amid volatility in the dollar index and volatility in the domestic equity markets.
In fact, some traders expect the rupee to trade in the range of 83.5500-84.7000 against the dollar as foreign funds continue to churn the equity market.
The persistent outflows of foreign funds have forced the Reserve Bank of India (RBI) to release foreign currency stocks in its reserve to meet market needs.
On Monday alone these foreign funds offloaded Indian equities worth Rs4,329.79 crore (about $513 million), according to exchange data.
Market expects the rupee to remain under pressure so long as the foreign funds continue to dump shares and hammer equity prices.