The Indian rupee suffered its steepest single-day decline in nearly two years, dropping 58 paise to a historic low of 86.62 (provisional) against the U.S. dollar on Monday, January 13, 2025. The plunge was driven by a stronger dollar and escalating crude oil prices, sparking concerns over the currency’s stability.
Opening at 86.12 in the interbank foreign exchange market, the rupee briefly touched 86.11 before closing at its lowest-ever level, reflecting a significant 0.67% loss in a single session. This marks the rupee’s most severe fall since February 6, 2023, when it had depreciated by 68 paise.
Over the past two weeks, the rupee has tumbled over Re 1, down from its December 30 closing value of 85.52. Notably, it breached the critical 85-per-dollar mark for the first time on December 19, 2024.
The decline follows last week’s downward trend when the rupee weakened by 18 paise on Friday to settle at 86.04, despite a brief recovery of 5 paise on Thursday. Earlier in the week, it fell by 6 paise on Tuesday and 17 paise on Wednesday.
Analysts attribute this unprecedented fall to the rising demand for the U.S. dollar as investors retreat from Indian markets, leading to large foreign capital outflows. On Friday alone, Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,254.68 crore. Exchange data reveals that FIIs have withdrawn Rs 22,194 crore from Indian equities so far in January.
Market experts suggest the Reserve Bank of India (RBI) may have allowed the rupee’s depreciation due to dwindling forex reserves and weakening currencies across emerging markets. The steep decline underscores the mounting economic pressure as investors and policymakers navigate shifting global financial dynamics.
