The Indian rupee plummeted to a historic low of 95.40 against the US dollar in early trade on Tuesday, declining another 17 paise after concluding the previous session at its weakest-ever closing mark. On Monday, the currency had dropped sharply by 39 paise to close at 95.23 against the greenback.
Global Uncertainty Weighs on Rupee
This decline comes amid escalating global uncertainty driven by intensifying tensions in the Middle East, which have dragged down financial markets. Crude oil prices have remained elevated, intensifying concerns about inflation and slowing economic growth. During Monday's trading, the rupee opened at 94.95 in the interbank foreign exchange market before sliding throughout the session to settle at 95.23.
Impact on Domestic Markets
The cautious sentiment was also reflected on Dalal Street, as benchmark indices tumbled into the red. The BSE Sensex was trading at 77,090.12, down 179.28 points or 0.23% as of 9:40 am. The NSE Nifty50 dipped to 24,036.95, down 63.85 points or 0.26%.
Expert Analysis
Dilip Parmar, Senior Research Analyst at HDFC Securities, stated, "The Indian rupee has hit a record low as the dollar recovered and crude oil prices held firm. This ongoing surge in oil prices, combined with foreign fund outflows, is putting a visible strain on India's trade balance and broader economy. Persistent dollar demand is expected to keep the pressure on the rupee in the short term, driving the USD/INR higher toward the 95.35 and 95.70 levels."
Foreign Investments and Commodity Markets
Foreign Institutional Investors remained net buyers in equities worth Rs 2,835.62 crore on Monday, based on exchange data. In the commodity market, oil prices continued to soar. Crude oil was trading at nearly $113 per barrel on May 5, as fresh attacks in the Strait of Hormuz heightened fears over the stability of the US-Iran ceasefire.
