MUMBAI — The rupee is edging towards ₹97 a dollar, with the currency taking another hit from heavy foreign selling, expensive crude and a stronger US dollar. It fell 0.5% on Thursday to ₹96.315 against the dollar, the weakest level in two months and its biggest single-day fall in more than two months.
Foreign investors have been pulling money out of Indian markets at a sharp pace. They sold ₹35,860 crore of Indian equities in September, after being net buyers in July and August. The selling continued into October, with another ₹9,232 crore leaving Indian equities on October 1.
More money leaving the market means more demand for dollars, adding to the pressure on the rupee. Crude is another headache. Brent oil has climbed above $100 a barrel, raising the amount India has to spend on imports and increasing the country’s dollar requirement.
At the same time, the US 10-year Treasury yield touched 5.34%, its highest level since 2002, giving global investors another reason to keep money in dollar assets.
SBI Research expects the rupee to move towards ₹97, citing foreign outflows, dollar demand and higher global yields. The currency has not crossed ₹97 yet. But it is getting close enough for importers, companies and the RBI to take notice.
