Rupee hits record low of 84.70/$ amid relentless FII outflows, slowing GDP growth

The rupee fell to an all-time low of 84.70 per US dollar on Monday, breaking the previous record of 84.5075. Concerns over India’s slowing GDP growth and a stronger dollar caused the depreciation. The Reserve Bank of India (RBI) reportedly intervened to stem the rupee's fall, with state-run banks selling dollars to curb the slide.

Weak GDP data and foreign outflows weigh on rupee

India’s GDP growth slowed to a seven-quarter low, amplifying speculation that the RBI might cut rates, which could further weaken the currency. Foreign investors sold Rs 1.60 lakh crore of domestic equities over the past two months, adding to the pressure. The dollar’s strength, reflected in the dollar index crossing 106, has also intensified challenges for the rupee, which has depreciated 70 paise over the past month.

Forex reserves deplete as RBI intervenes

RBI’s interventions have strained India’s forex reserves, now at a five-month low of $656.6 billion after a $47 billion decline in seven weeks. Analysts fear continued intervention could erode reserves further, limiting the central bank's ability to stabilize the rupee.

Broader regional decline adds to concerns

The rupee’s depreciation mirrors a regional trend, with other Asian currencies weakening by 0.2 to 0.6 per cent amid global pressures. U.S. President-elect Donald Trump’s comments on currency tariffs have added uncertainty.

Outlook: Analysts see more weakness ahead

Market experts remain cautious. HDFC Securities forecasts a range of 84.35-84.94/$, while Kedia Commodities and Emirates NBD see the rupee touching 85/$ soon. Motilal Oswal projects a steeper fall to 85.50/$.

As the RBI’s policy meeting approaches, all eyes are on potential dissent within the Monetary Policy Committee, which could shape the rupee's trajectory amid mounting global and domestic pressures.