Rupee falls 9 paise to hit record low of 85.83 against U.S. dollar in early trade

The rupee depreciated 9 paise to hit its record low of 85.83 against the U.S. dollar in early trade on Wednesday (January 8, 2025) as strengthening American currency and higher crude oil prices continued to play spoilsports even as the government lowered the country's economic growth projection.

According to analysts, subdued domestic equity markets also weighed on the Indian currency even as better growth prospect in the U.S. economy fuelled the expectations of delayed interest rate cut by the Federal Reserve, leading to a record rise in the U.S. Treasury yields as well as dollar demand.

The latest government data released on Tuesday (January 7, 2025) showed India’s economic growth rate is estimated to slip to a four-year low of 6.4% in 2024-25 due to poor show by the manufacturing and services sectors.

The Gross Domestic Product (GDP) growth at 6.4% will be the lowest since the Covid year (2020-21) when the country witnessed a negative growth of 5.8%. It was 8.2% in the last fiscal ended March 2024.

The first advance estimates of the national income for 2024-25 released by the National Statistics Office (NSO) is lower than the 6.6% projected by the Reserve Bank in December 2024.

At the interbank foreign exchange, the rupee opened at 85.82 and slipped further to 85.83 against the greenback in initial deals, 9 paise lower from its previous close.

On Tuesday (January 7, 2025), the rupee settled 6 paise lower at 85.74 against the dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.09% higher at 108.48.

Brent crude, the global oil benchmark, rose 0.36% to $77.33 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was trading 180.32 points, or 0.23%, lower at 78,018.79 points, while the Nifty was down 47.35 points, or 0.20%, at 23,660.55 points.

Foreign institutional investors (FIIs) offloaded ₹1,491.46 crore in the capital markets on a net basis on Tuesday (January 7, 2025), according to exchange data.