Post by : Badri Ariffin

On Friday, the Indian rupee experienced its most significant single-day drop in over three months, plunging past the critical level of 89 per dollar as risk aversion took hold in global and domestic markets. The currency temporarily dipped by 78 paise, hitting a low of 89.50 before slightly recovering to 89.40 on the interbank foreign exchange market, opening at 88.67, lower than Thursday’s closing figure of 88.68.

This dramatic fall set new records, surpassing the previous intraday low of 88.85 recorded on September 30. The largest single-session decline prior to this occurred on July 30, with a decrease of 89 paise.

Market analysts attribute this decline to a mix of strengthening global currencies and ongoing domestic market uncertainty. The dollar index rose to 100.05, indicating strong demand for USD. Additionally, Brent crude prices dipped by 1.21% to $62.64 per barrel, further contributing to the volatility faced by emerging market currencies.

Local equity markets reflected this pressure, with the Sensex retreating 360.40 points (down 0.42%) to 85,272.28, while the Nifty dropped by 111.05 points (0.41%) to close at 26,081.10, illustrating a generally risk-averse trend. Despite the downturn, foreign institutional investors were modestly active, acquiring equities worth ₹283.65 crore on Thursday, per exchange data.

Concerns were further heightened by newly released government data highlighting stagnant domestic growth, with the eight core infrastructure sectors showing no growth in October year-over-year. While some sectors like refinery products, fertilizers, and steel saw increases, coal and electricity production fell. These sectors had previously expanded by 3.3% in September and 3.8% in October last year, pointing to a divergent recovery path.

As the week concludes, investors are left pondering the potential duration of this currency strain, with many indicators suggesting increased caution across global and domestic financial sectors.

#Business News #Economy