The Indian rupee hit a record low against the U.S. dollar on Monday, driven by persistent demand for the dollar and continued outflows from Indian equities. The rupee dropped to an all-time low of 84.0725 against the U.S. dollar, surpassing the previous low of 84.07 recorded last Friday. This downward trend is attributed to foreign banks’ dollar bids and sustained outflows of over $8 billion from local equities in just 10 sessions.

For over two months, the Reserve Bank of India (RBI) tried to keep the rupee stable around the 84 mark. However, the ongoing sell-off by foreign investors and weakness in Asian currencies—exacerbated by disappointment over China’s economic stimulus measures—further pressured the rupee. Asian currencies were down by 0.1% to 0.3%, while the U.S. dollar index hovered near its two-month peak at 103.

Local banks were seen offering dollars, while larger foreign banks dominated the demand. Market analysts predict the rupee to trade between 83.95 and 84.20 in the near term. Amit Pabari, managing director of FX advisory firm CR Forex, pointed out that RBI’s interventions, along with a potential reduction in equity outflows, could provide the rupee some relief and help it recover.

Market Impact and Geopolitical Concerns

Brent crude oil prices—currently at $78 per barrel but up 9% in October—are being closely monitored, as rising tensions in the Middle East could further disrupt global oil supplies and impact the rupee. The Indian stock market also felt the ripple effects, with the BSE Sensex plunging by 564.51 points to 72,835.27 and the NSE Nifty falling 153.35 points to 22,119.15 in early trading. The geopolitical uncertainty triggered broad sell-offs across sectors, affecting investor sentiment.

The situation highlights the importance of sound financial planning and risk management, especially in volatile global markets. Investors are advised to consider profit-booking and exercise caution amid ongoing market corrections.

Last time, in June 2018, the Indian currency hit an all-time closing low of 68.79 against the dollar. However, the current situation presents more serious challenges due to global economic uncertainties, especially regarding oil prices and geopolitical tensions.