The Indian rupee slipped by 3 paise to a new all-time low of 84.76 against the US dollar during early trading hours on Tuesday. This marks the second consecutive day of record lows for the currency, following Monday's decline of 13 paise, which saw the rupee close at 84.73. The ongoing depreciation is attributed to weak macroeconomic data and a strong US dollar dominating global markets, which continues to weigh on the Indian currency.

Sluggish GDP growth adds pressure

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India's gross domestic product (GDP) growth slowed to a seven-quarter low of 5.4 per cent in the July-September 2024 quarter, down from 6.7 per cent in the preceding quarter and 8.1 per cent a year ago. The lower-than-expected growth raised concerns about economic momentum, with market participants anticipating possible monetary policy easing by the Reserve Bank of India (RBI).

FIIs offload equities

Over October and November, FIIs sold domestic equities worth Rs 1.16 lakh crore, creating additional demand for the US dollar. This sustained selling activity, combined with a robust US dollar, has exerted downward pressure on the rupee.

Asian currency weakness impacts sentiment

Other Asian currencies also experienced declines, with the Chinese yuan touching a one-year low of 7.3 per dollar. Regional currency pressures, coupled with global uncertainties, have added to the rupee's challenges.

RBI intervenes 

The RBI intervened in the forex market at the 84.65-84.70 levels to curb excessive volatility. While the central bank avoids targeting specific exchange rate levels, its actions aim to provide stability and anchor market expectations.

Outlook for the rupee

With strong demand for the US dollar and persistent FII outflows, the rupee is expected to remain under pressure in the near term. Analysts predict that the USD/INR pair could trade within the 84.50-84.95 range in the coming days.