Indian Rupee hits two-month low against US dollar

The Indian rupee has faced significant downward pressure, closing at 96.25 against the US dollar, its lowest level in over two months. The currency slumped by 31 paise during Thursday's trading session, driven by global market risk aversion, rising US Treasury yields, and increased demand for the US dollar.

Several factors are contributing to the rupee's weakness, including heavy selling by Foreign Institutional Investors (FIIs). Reports indicate that FIIs have offloaded equities worth approximately Rs 9,484.22 crore on Thursday, and nearly 90% of foreign investment that entered the Indian market over the last two months has since been withdrawn. Additionally, surging global crude oil prices and uncertainty regarding international deals have added to the pressure.

Experts from Kotak Securities and Mirae Asset Sharekhan suggest that if the rupee breaks past the 97 level, it could potentially slide toward 99. Such a decline could exacerbate domestic inflation. While inflows through FCNR(B) have provided some support, much of this capital has moved into the Reserve Bank of India's foreign exchange reserves rather than directly impacting the currency's market value. Market analysts anticipate that intervention by the RBI may be necessary to support the rupee at lower levels.