Earlier today, a Bloomberg report had said that any signs of a dovish stance in the central bank’s upcoming policy on August 8 could potentially drive the rupee even lower.
According to a PTI report, forex traders noted that the sharp decline in the rupee was driven by a significant downturn in Indian equity markets and substantial foreign fund outflows.
The report also added that last week, global stock markets dropped sharply after a disappointing US jobs report raised worries about a possible recession, making investors seek safer options. In addition, the upcoming US elections and rising tensions in the Middle East, especially after the killing of Hamas leader Ismail Haniyeh in Tehran, are making investors extra cautious.
Talking about the recession in the US and how it is worrying investors, Mumbai-based Ajay Kedia of financial services firm Kedia Advisory said as per a report in ANI, "U.S. recession concerns led to worries about foreign outflows from India and emerging markets.
"The fall is attributed to concerns over a potential U.S. recession, which has spurred worries about foreign outflows from India and other emerging markets. The selloff in U.S. and Asian equities, following a disappointing U.S. jobs report, has intensified these concerns, causing significant market jitters," Kedia added as per the report.
On the other hand, despite the weakening of the US dollar and an 11 percent correction in oil prices, the rupee has remained below the 83.70 level.
Meanwhile, the dollar index, which measures the greenback's strength against six currencies, was down 0.24% at 102.95. Brent crude futures, the global oil benchmark, rose 0.30% to USD 77.04 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 1533.11 points, or 1.89%, lower at 79,448.84 points. The broader NSE Nifty dropped 463.50 points, or 1.88%, to 24,254.20 points. Foreign Institutional Investors (FIIs) were net sellers on Friday, offloading shares worth Rs 3,310.00 crore, according to exchange data.