Rupee recovers from record low, gains 8 paise to 84.38 against the US dollar

`The rupee rebounded on Monday, appreciating by eight paise to 84.38 against the US dollar in early trade. This recovery comes despite the strength of the American currency and persistent foreign fund outflows. Lower crude oil prices in the global market provided some relief to the Indian currency, forex traders noted.

Rupee's bounce back from historic low

The local unit opened at 84.42 at the interbank foreign exchange market before strengthening to 84.38. This marked a recovery from Thursday’s close, when the rupee had dipped to an all-time low of 84.46 against the greenback. Forex markets remained closed on Friday for Guru Nanak Jayanti.

The dollar index, which measures the US currency's performance against six major currencies, showed a marginal rise of 0.06 percent, trading at 106.68. Meanwhile, Brent crude futures increased by 0.51 percent, reaching USD 71.40 per barrel.

Analysts pointed out that higher inflation and rising US Treasury yields are adding pressure on the rupee. Wholesale price inflation in India climbed to a four-month high of 2.36 percent in October, driven by costlier food items and manufactured goods. Retail inflation also surpassed the Reserve Bank of India's upper threshold, hitting a 14-month high of 6.21 percent due to escalating food prices.

On the domestic front, the equity markets displayed a downward trend. The Sensex fell by 125.08 points, or 0.16 percent, to 77,455.23, while the Nifty dropped 20.15 points, or 0.09 percent, to 23,512.55.

Foreign Institutional Investors (FIIs) continued their selling spree, offloading shares worth Rs 1,849.87 crore on Thursday, according to exchange data.

Mixed data on trade and forex reserves

In October, India's merchandise exports jumped by 17.25 percent year-on-year to USD 39.2 billion, the strongest growth in over two years. However, the trade deficit widened to USD 27.14 billion on a sequential basis. India's forex reserves declined by USD 6.477 billion, falling to USD 675.653 billion for the week ending November 8, as per RBI data. 

The rupee's outlook remains cautious, with inflationary pressures and global market dynamics likely to influence its movement in the coming weeks.