Rupee falls to all-time low of 84.09 against dollar; FPIs pull out $1.2 bn
- The rupee recently slumped 37 paise to settle at an all-time low of 84.09 against the US dollar
Highlights:
- The rupee slump was followed by a sell-off in global markets amid rising geopolitical tensions in the Middle East, worries over recession in the US and carryover trade in Japanese yen.
- The decline in the currency came on the back of a sharp downturn in the equity markets and foreign capital outflows.
- Foreign portfolio investors (FPIs) pulled out Rs 10,073 crore ($ 1.20 billion) from the markets, putting pressure on the rupee, exchange data showed.
- The decline comes amid fresh economic concerns, including the appreciation of the Japanese yen due to rising interest rates in Japan for the first time since August 2006.
- This rate hike has triggered a sell-off in risky assets, causing panic among borrowers.
- The Japanese yen surged to seven-month highs against the dollar as traders aggressively unwound carry trades after a slew of economic data last week raised the prospect of a US economic downturn and bigger rate cuts from the Federal Reserve.
- Fears of the US staring at a recession intensified after the July jobs report, which threw a big downside surprise with fairly broad-based signs of weakening.
- US unemployment rate jumped to 4.3 per cent, its highest level in nearly three years and marking the fourth consecutive
Prelims Takeaway
- FPI
- Exchange rate