The Wire Staff 
New Delhi: The Indian rupee fell to an all-time low of 84.50 against the US dollar on Thursday, November 21, marking a 0.1% drop during the session and a 1.5% decline for the year. The currency’s slide was driven by sustained foreign fund outflows from Indian markets and escalating geopolitical risks, particularly the ongoing Russia-Ukraine conflict, which heightened global risk aversion.
The rupee weakened by 8 paise despite a rebuttal from the Reserve Bank of India (RBI) against the International Monetary Fund’s (IMF) classification of India’s exchange rate policy as a “stabilised arrangement” for the period of December 2022 to October 2023. In an article co-authored by RBI deputy governor Michael Patra and published by the central bank, the RBI contested the IMF’s assessment, calling it “ad hoc, subjective, an overreach” and “tantamount to labelling,” according to a Times of India report.
The article defended the RBI’s foreign exchange interventions, arguing that they were proportionate to India’s GDP size. “RBI’s net interventions to GDP averaged 1.6% during Feb to Oct 2022, as against 1.5% during earlier crises, which were of much lower magnitude,” the article stated.
The rupee’s decline coincided with turbulence in Indian equity markets. The BSE Sensex dropped 0.5%, while the Nifty 50 fell 0.7%. Adani Group shares experienced a sharp sell-off, with Adani Enterprises plunging over 20%. Foreign institutional investors (FIIs) pulled Rs 3,412 crore from equities on Tuesday.
Bond markets also suffered, with foreign investors offloading Rs 10,400 crore worth of bonds in November, mainly instruments included in JPMorgan’s emerging market debt index.
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Forex consultant K.N. Dey highlighted the combined impact of dollar strength and rupee weakness on the currency. “RBI has spent over $30 billion defending the rupee,” he told the Times of India.
Dey also pointed to heightened geopolitical risks, particularly the escalation of the Russia-Ukraine war, which have made forecasting the rupee’s trajectory challenging. “It is not just dollar strength but also rupee weakness because of outflows from the Indian market,” he added.