In chat with Anil Singhvi, market expert Ajay Bagga explains what's causing weakness in rupee and why FIIs continue to sell

As the foreign institutional investors (FIIs) continue with their selling spree and the rupee remains weak, Zee Business Managing Editor Anil Singhvi on Thursday spoke to market expert Ajay Bagga and tried to understand the reasons behind this trend. The data suggests that FIIs have been selling for the past 21 days on daily basis.  

Singhvi asked Bagga how long the trend will continue and when can we expect reversal in the same or at least can expect stability on that front.  

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Bagga said it has been seen that FIIs always resort to selling when our markets outperform and the global markets show volatility. It is easy to pull out money from the Indian markets as our door is always open and easily, they can withdraw money in such market scenarios. It can be, however, seen in two ways. One, a substantial chunk of the money pulled out from the secondary market has been routed to primary market via IPOs and second is that overall FIIs data of this year remains positive," said Bagga.  

As long as dollar remains strong, traditionally it has been seen that emerging markets like Indian lose money, said Bagga.  

Talking on why the rupee is falling, he said one is because of lack of intervention from the Reserve Bank of India (RBI). Bagga said, the RBI is likely to purposely let the rupee slip amid weakening of several foreign currencies. Many countries do it to protect their export, said the market expert.

"One has to understand that it is not due to FIIs pulling out funds from the Indian markets as most of the money is returning to primary market via IPOs."  

#FIIs की बिकवाली और रुपये में कमजोरी कब रूकेगी?

FIIs की बिकवाली और रुपये में कमजोरी की क्या हैं वजहें?

जानिए मार्केट एक्सपर्ट अजय बग्गा की ग्लोबल और घरेलू बाजार पर
क्या है राय?@Ajay_Bagga | @AnilSinghvi_ | #StockMarket pic.twitter.com/qdjizyfwmV

— Zee Business (@ZeeBusiness) December 16, 2021

Meanwhile, on Wednesday, the rupee plunged by 44 paise to close at a 20-month low of 76.32 against the American currency.

The rupee recovered 10 paise to 76.22 against the US dollar in opening trade on Thursday, after the US Federal Reserve's monetary policy decision, said a Reuters report.  

At the interbank foreign exchange, the rupee opened at 76.31, then surged higher to 76.22 against the American dollar, registering a rise of 10 paise in the early deals.

As per the data, FIIs remained net sellers in the Indian markets to the tune of Rs 23,148.85 this month between December 1 and December 2021.