Mumbai: The Indian rupee slid 1 paisa to a fresh all-time low of 84.32 against the US dollar on Thursday, pressured by weak domestic equities and persistent foreign fund outflows, which dented market sentiment.

Forex traders noted that investors adopted a cautious stance ahead of the US Federal Reserve's meeting outcome. In addition, overnight gains in crude oil prices added to the downward pressure on the rupee.

However, a slight correction in the dollar index against major currencies helped prevent a sharper fall in the local currency.

At the interbank foreign exchange market, the rupee opened at 84.26 against the US dollar, touching a high of 84.26 and a low of 84.38 during the day. It closed at 84.32, marking a decline of just 1 paisa from the previous session.

US Dollar and Crude Oil Impact

The rupee had depreciated 22 paise on Wednesday, reaching a record low of 84.31. Despite the weak domestic equities and sustained foreign institutional investor (FII) outflows, the softening of the US dollar index helped cushion the rupee's decline.

The dollar index, which measures the US dollar's strength against a basket of six currencies, was trading 0.22 per cent lower at 104.86. Meanwhile, Brent crude oil fell 0.32 per cent to USD 74.68 per barrel.

Outlook for the Rupee

Experts predict that the rupee may continue to face downward pressure due to the overall strength of the US dollar, which is supported by factors such as the US presidential election and ongoing FII outflows. Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, noted that the rupee could find some support from easing commodity prices and reduced geopolitical risk premium.

Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, mentioned that any intervention by the Reserve Bank of India (RBI) could help support the rupee at lower levels. However, if the Federal Open Market Committee (FOMC) remains hawkish in its policy stance, the rupee could weaken further, potentially reaching 84.50.

The domestic equity market saw significant losses on Thursday, with the 30-share BSE Sensex falling by 836.34 points (1.04 per cent) to close at 79,541.79 points. The Nifty declined by 284.70 points (1.16 per cent), settling at 24,199.35 points. Foreign institutional investors (FIIs) were net sellers in the capital markets, offloading shares worth Rs 4,888.77 crore, according to exchange data.

Bhansali advised importers to cover their payments for November and December by buying on dips near 84, while exporters are expected to book profits on any uptick of 25 paise after monitoring market movements.

With PTI inputs