Rupee Dollar Fall / Biggest crisis for rupee, biggest fall in 2 weeks, see full report

For the first time in the last two weeks, the rupee on Tuesday registered a huge decline of 51 paise, closing at 87.23. According to experts, the increasing demand for the dollar and the continuous outflow of FIIs have increased the pressure on the rupee.

Rupee Dollar Fall: The Indian currency, the rupee, has been experiencing significant fluctuations against the US dollar in recent days. After a 45-paise drop on February 10, it saw a sharp decline of 51 paise on Tuesday, reaching a level of 87.23. This marks the biggest fall in the past two weeks. In this article, we analyze the key reasons behind this depreciation and its potential impacts.

Key Reasons for Rupee's Decline

Rising Demand for the Dollar

Increased dollar demand from importers towards the month-end has put pressure on the rupee.
Uncertainty over global trade tariffs has led to volatility in the forex market.

Continuous FII Outflows

Foreign Institutional Investors (FIIs) have been consistently withdrawing capital from Indian markets.
According to exchange data, FIIs sold equities worth ₹6,286.70 crore on Monday.

Uncertainty in US Trade Policy

Statements by the US President regarding trade tariffs have created market anxiety.
As a result, demand for the dollar as a safe-haven investment has surged, weakening the rupee.

Short Position Covering

The expiry of futures contracts has increased pressure on traders to cover short positions.
This has further weakened the rupee.

Impact of Rupee's Decline

Costlier Imports

A stronger dollar could make crude oil, electronics, and other imported goods more expensive.
This may lead to a rise in inflation.

Impact on Foreign Investments

A continuous decline in the rupee could weaken investor confidence.
Volatility in the Indian stock market may persist.

RBI's Possible Intervention

The Reserve Bank of India (RBI) may intervene in the market to stabilize the rupee.
Such intervention could bring some recovery in the currency market.

Dollar Index and Global Factors

The Dollar Index, which measures the strength of the US dollar against six major currencies, increased by 0.04% to 106.64.
Meanwhile, Brent crude futures fell by 0.12% to $74.69 per barrel, indicating continued global market instability.

Conclusion

The recent rupee depreciation is a result of multiple global and domestic factors. The rising demand for the dollar, continuous FII outflows, uncertainty in US trade policies, and futures contract expirations have all contributed to this pressure. If the RBI intervenes and market stability improves, some recovery in the rupee could be possible. However, traders and investors must remain cautious while planning their future strategies.