Rupee crashes to hit record low of 86.50 against U.S. dollar

 The rupee extended losses to fall below the psychologically important 86.50 level on Monday (January 13, 2025) pressured by a surge in the U.S. dollar and likely outflows from local equities, traders said.

The rupee declined to 86.54 as of 12:55 p.m. IST, its weakest level on record, down nearly 0.7% on the day. The currency is on course to log its worst single-day performance in nearly two years.

A record surge in crude oil prices, sustained outflow of foreign capital, and a negative trend in domestic equity markets also kept the Indian currency under pressure, forex traders said.

The dollar, they said, strengthened on better-than-expected job growth in the U.S. market, which also fuelled the benchmark treasury yields amid expectations of slower interest rate cut by the Federal Reserve.

At the interbank foreign exchange, the rupee opened at 86.12 and fell to the historic low level of 86.31 against the greenback in initial deals, registering a steep loss of 27 paise from its previous close.

On Friday, the rupee declined 18 paise to settle at 86.04 against the U.S. dollar.

Meanwhile, the dollar index was just shy of the 110-handle, up 0.2% on the day and hovering close to its highest level in over two years. The 10-year U.S. bond yields remained elevated touching its October 2023 level at 4.76%.

Brent crude, the global oil benchmark, surged 1.44% to $80.91 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was trading 550.49 points, or 0.71%, lower at 76,828.42 points, while the Nifty was down 182.45 points, or 0.78%, at 23,249.05 points.

Foreign institutional investors (FIIs) offloaded ₹2,254.68 crore in the capital markets on a net basis on Friday, according to exchange data.

The Reserve Bank of India on Friday said the country's forex reserves dropped by USD 5.693 billion to USD 634.585 billion in the week ended January 3.

The latest government data released on Friday, however, showed the industrial production (IIP) growth accelerated to a six-month high of 5.2% year-on-year in November 2024, riding on the increased festive demand and pick-up in the manufacturing sector.