The continued outflow of foreign capital from Indian equities and the rise in crude oil prices amid global uncertainty caused the Indian rupee to fall 12 paise to a historic low of 84.0975 per dollar on October 11, marking the first time in history that it has fallen below the 84 mark against the US dollar.
The Clearing Corporation of India Ltd (CCIL) reports that the rupee ended the previous session at 83.98 to the dollar.
Foreign investors bring dollars into India for investment purposes, and they withdraw the currency when there are outflows. Consequently, inflows increase the dollar supply in India, making it relatively cheaper compared to the rupee, whereas outflows drive up demand, thus raising its value.
FPIs have sold shares worth Rs 1.13 lakh crore in the Indian stock market in the last nine days, with Rs 65,000 crore of those sales occurring in the cash category.
From around $69 on September 30 to $78.92 per barrel now, Brent crude has increased in value.
According to a market expert, international investors are shifting to Chinese equity markets due to their lower valuations, which is another benefit of the country’s recent stimulus package, which also includes a 10 basis point policy rate decrease and a 50 basis point reduction in the cash reserve ratio.
Media reports that China may announce a new fiscal stimulus worth another 2 trillion yuan ($283 billion) in an effort to support its economy.
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