Rupee Hits Historic Low Amid Global Tensions and Market Sell-Off

The Indian rupee has hit a record low of 84.50 against the US dollar, pressured by global geopolitical tensions, particularly between Russia and Ukraine, and a significant sell-off in domestic markets. Despite the challenges, India's strong fundamentals are expected to stabilize the currency in the medium-term.

The Indian rupee depreciated by 8 paise, hitting an all-time low of 84.50 against the US dollar on Thursday. The fall was driven by massive sell-offs in domestic equity markets and rising crude oil prices amid global geopolitical volatility.

Forex traders attribute the rupee's weakness to the strengthening US dollar, which is benefiting from safe-haven demand due to escalating tensions between Russia and Ukraine. Additionally, the ongoing outflow of foreign funds put further pressure on the rupee.

The Reserve Bank of India's interventions, supported by healthy foreign reserves, may help manage rupee volatility in the short term. However, foreign portfolio investors have been withdrawing capital, exacerbated by factors such as high Treasury yields and domestic market conditions.

(With inputs from agencies.)