Rupee depreciates 9 paise to hit record low of 85.83 against US dollar

The rupee depreciated 9 paise to hit its record low of 85.83 against the US dollar in early trade on Wednesday as strengthening American currency and higher crude oil prices continued to play spoilsports even as the government lowered the country's economic growth projection.

According to analysts, subdued domestic equity markets also weighed on the Indian currency even as better growth prospect in the US economy fuelled the expectations of delayed interest rate cut by the Federal Reserve, leading to a record rise in the US Treasury yields as well as dollar demand.

The latest government data released on Tuesday showed India's economic growth rate is estimated to slip to a four-year low of 6.4 per cent in 2024-25 due to poor show by the manufacturing and services sectors.

The Gross Domestic Product (GDP) growth at 6.4 per cent will be the lowest since the Covid year (2020-21) when the country witnessed a negative growth of 5.8 per cent. It was 8.2 per cent in the last fiscal ended March 2024.

The first advance estimates of the national income for 2024-25 released by the National Statistics Office (NSO) is lower than the 6.6 per cent projected by the Reserve Bank in December 2024.

At the interbank foreign exchange, the rupee opened at 85.82 and slipped further to 85.83 against the greenback in initial deals, 9 paise lower from its previous close.

On Tuesday, the rupee settled 6 paise lower at 85.74 against the dollar.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.09 per cent higher at 108.48.

Brent crude, the global oil benchmark, rose 0.36 per cent to $77.33 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex was trading 180.32 points, or 0.23 per cent, lower at 78,018.79 points, while the Nifty was down 47.35 points, or 0.20 per cent, at 23,660.55 points.

Foreign institutional investors (FIIs) offloaded Rs 1,491.46 crore in the capital markets on a net basis on Tuesday, according to exchange data.