Rupee depreciation may exacerbate market sell-off if downtrend continues

Rupee depreciation, if it continues, will likely pull the markets down further. Since September 2024, the rupee has declined by 3.1 per cent, the Nifty has dropped by 8.5 per cent during the same period, and the Sensex has fallen by 7.3 per cent. If the decline continues, markets will need to brace for more pain as it could push foreign portfolio investors (FPIs) to exit their positions faster than anticipated.

 

On Monday, the rupee was trading at 86.58 against the dollar, a fresh low amid a rising dollar and outflows from Indian equities. The rise in crude oil prices,