Rupee sinks to fresh low of ₹91.7 a dollar

Indian rupee depreciated to a fresh low of ₹91.7 a dollar on continued capital outflow and rising risk of U.S. acquisition of Greenland, on January 21. 

The Indian currency opened at ₹91.1 and shot to a low of ₹91.7 at day’s close. The primary reason for the currency’s fall was persistent outflow of foreign institutional investments from the Indian equity market. The FIIs had pulled out more than ₹30,000 crore from the Indian equity so far. Worsening geo-political risks like the increasing fears of acquisition of Greenland by the U.S. has become an add-on to the triggers.

“The Indian Rupee suffered its steepest single day decline in two months, plunging 72 paise to a record low of 91.69 against the U.S. Dollar. The currency is reeling under the weight of aggressive foreign capital outflows from domestic equities and a prolonged delay in a U.S. trade deal. Heightened geopolitical uncertainty continues to fuel depreciation, with the pace of the fall largely overwhelming intermittent central bank interventions,” said Nandish Shah – Deputy Vice President, HDFC Securities.

While the continuous depreciation in the currency has found its way into political discussions, the RBI Governor Sanjay Malhotra in a recent interview clarified that a nation should not be judged by its exchange rate. 

Besides currency, commodities too have been continuously indicating global geo-political risks. Gold and silver has so far rallied more than 60% and doubled respectively in the past year. Spot Gold on Multi Commodity Exchange (MCX) hit ₹1.5 lakh per 10 grams and spot silver crossed ₹3.4 lakh per kg. This is majorly because of the safe haven demand in the event of increasing number of tensions between large economies. Indian equities too closed 0.3% lower at 25157.5 points following a three- month low of 25323.5 points on January 20.