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Published: October 6, 2024
Updated: October 6, 2024

Indian Rupee Hits Record Low of 83.99 Against the US Dollar Amid Rising Oil Prices and Foreign Fund Outflows

The Indian rupee has hit a new all-time low against the US dollar, sinking to 83.99 on Friday. This decline, attributed to surging oil prices and the ongoing exodus of foreign funds from Indian stock markets, marks a slight dip from its previous record low of 83.9850 on September 12, 2024.

Rupee’s Decline and Recent Rebound

The Indian rupee had shown signs of recovery, rebounding to around 83.50 just over two weeks ago. However, recent market conditions have caused a reversal in its trajectory. The rupee dropped to 83.99 per dollar in Friday's trading session, slightly lower than the 83.9675 mark seen the day before.

Key Drivers Behind the Fall

The fall in the rupee's value is closely tied to rising crude oil prices, which surged by over 3% in the last session. This price hike is driven by concerns about potential disruptions in oil supply from the Middle East. Tensions in the region have escalated, with Israel planning potential strikes on Iran, a key oil producer. Adding to these concerns, natural disasters in the US have further fueled volatility in the oil market. Hurricane Milton, the second major storm to hit the US in recent weeks, has caused havoc in Florida, leading to gasoline shortages and further increasing demand for fuel. This spike in demand has contributed to the rise in crude prices, putting additional pressure on the rupee.

Impact of Foreign Fund Outflows

In addition to rising oil prices, the continuous outflow of foreign funds from India's stock markets has weakened the rupee further. Investors, wary of the uncertain global economic environment and higher US interest rates, are shifting their investments away from emerging markets like India, contributing to the depreciation of the rupee. The Indian rupee's record-low value against the US dollar is a reflection of ongoing global tensions, rising crude prices, and foreign fund outflows. While the rupee had shown signs of recovery recently, these external factors have created significant headwinds. With oil prices expected to remain elevated due to supply concerns, and foreign fund outflows likely to continue, the rupee may face further challenges in the coming weeks.