Key Points:
- Rupee falls 6 paise to 88.68/USD due to foreign fund outflows and strong dollar demand from importers.
- Despite lower crude and a weaker dollar index, FII selling and importer demand kept the rupee under pressure.
- Inflation hits a record low at 0.25%, offering some support to the currency despite external headwinds.
The rupee falls 6 paise lower at 88.68 against the U.S. dollar on Nov. 13 in Mumbai, as persistent foreign fund outflows and sustained dollar demand from importers put pressure on the domestic currency. The movement came despite a decline in global crude oil prices and renewed optimism surrounding U.S.-India trade discussions, which helped limit further losses.
The currency opened at 88.66 at the interbank foreign exchange market. It moved between an intra-day high of 88.63 and a low of 88.73 before settling at 88.68. On Nov. 12, the rupee ended 12 paise lower at 88.62.
Market drivers shift
Forex traders noted that the rupee falls within a tight band throughout the day. They cited lower crude oil prices overnight and improved sentiment around trade talks as factors providing support. However, they added that consistent dollar demand from local importers, including oil companies, continued to weigh on the currency.
“We expect the rupee to trade with a slight negative bias on dollar demand from importers. However, a positive tone in the domestic markets and falling global crude oil prices may support the rupee at lower levels,” Mirae Asset ShareKhan Research Analyst Anuj Choudhary said. He added that the USD-INR spot rate may remain within the 88.40 to 89 range.
The dollar index, which measures the dollar against six major currencies, traded 0.29% lower at 99.20. The move came after the U.S. administration passed a bill ending a record 43-day government shutdown.
Brent crude, the global benchmark, traded 0.21% lower at $62.58 per barrel in futures trade.
Domestic markets stable
Indian equity markets showed little volatility. The Sensex closed marginally higher at 84,478.67, while the Nifty ended nearly unchanged at 25,879.15.
Exchange data showed that Foreign Institutional Investors sold equities worth ₹1,750.03 crore on Nov. 12, adding mild pressure as the rupee falls amid outflows.
In a separate development, the government approved an Export Promotion Mission (EPM) on Nov. 12 with a total outlay of ₹25,060 crore for six financial years beginning this fiscal year. The mission is intended to help exporters manage high tariffs imposed by the U.S. and will be implemented through two sub-schemes — Niryat Protsahan (₹10,401 crore) and Niryat Disha (₹14,659 crore). This move is expected to offer some long-term support, although the rupee falls in the short term due to market pressures.
Inflation touches record low
On the macroeconomic front, retail inflation dropped to 0.25% in October, reaching its lowest level in the current Consumer Price Index series, which uses 2012 as the base year. The decline followed reductions in GST rates on nearly 380 mass-consumption items and lower prices of vegetables, fruits and eggs.
Inflation stood at 1.44% in September and 6.21% in October 2024, offering some relief even as the rupee falls due to external factors.
The fall in inflation and stability in global commodities are expected to offer some cushioning for the rupee in the near term, according to analysts, though persistent foreign outflows may keep the currency under pressure.
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