Today on Wednesday the Indian Rupee has suffered a major blow. The price of 1 dollar has crossed ₹90/$ for the first time. Rupee has touched its all time low.
Famous banker Uday Kotak has shared a post on this on social media platform X. He said that the main reason for this is the continuous withdrawal of money from the Indian stock market by foreign investors. Be it FPIs (Foreign Portfolio Investors) or private equity funds that invest through the FDI route, everyone is running away with their money. On the other hand, Indian investors are buying at the same time and controlling the market.
Nifty returns ‘zero’ in dollar terms
However, the return in Nifty dollar has now become zero, meaning there has been no profit in foreign exchange in a year. Uday Kotak has also given his opinion on what Indian companies will have to do.
On Wednesday, the rupee crossed 90 for the first time and famous banker Uday Kotak posted – “₹@90. The simple reason for this is the withdrawal of money from Indian stocks by foreign investors, be it FPI or PE funds investing through FDI. Indian investors are buying. Time will tell who is smarter. For now, foreigners seem to be smarter. 1 year Nifty return in dollars is 0. But it is a long battle. Now is the time for Indian business to get out of its comfort zone.
Tax branch selling worth 17 billion dollars
This year the rupee has fallen by about 5% against the dollar, due to trade, investment and hedging by companies to avoid further weakness. Meaning the dollar is going out, the rupee is under pressure, but in the long run India’s story is strong. Apart from this, if seen, the dollar has also weakened by 8.5% against other major currencies of the world, yet our rupee has fallen the most. The result was that the Indian Rupee has got the title of the worst performing major currency in the whole of Asia this year. This means that the currencies of other Asian countries are stable, but our rupee alone is faltering badly.
Reuters told in its report that it took about 1 year for the Indian rupee to reach from 85 to 90 rupees and about 6 months to reach from 0 to 85. This year, foreign investors have sold about $17 billion in Indian shares. Along with this weakness in portfolio investment, there has also been a slowdown in FDI, which has further increased the pressure on the rupee.
The surprising thing is that the earnings of the companies have been continuously better than the last five quarters and in the September quarter, the country’s GDP grew at a fantastic pace of 8.2%, everything is going well, yet the rupee is not showing signs of stopping. Meaning the economy is strong, profits are increasing, but due to foreign money withdrawal the rupee is falling. The common man is not able to understand why the rupee is weakening amidst good news.
What caused the decline in the Indian Rupee?
This year, foreign investors have withdrawn about 17 billion dollars i.e. about Rs 1.4 lakh crore from the Indian stock market, due to which India has become one of the most affected markets in the world. On top of that, FDI i.e. foreign direct investment has also slowed down, which has increased further pressure on the rupee. In September, new money worth $6.6 billion had come in, but due to the huge boom in the IPO market, private equity and venture capital people are running away with profits by selling old investments, so overall the money is going out. Money comes in, but more goes out, that is why the rupee is weakening. According to ET report, Anil Bhansali of Finrex says that if RBI at 90
Net FDI turned negative for the second time in September, meaning the money coming into India was less than what went out. According to the November bulletin of RBI, Indian companies are investing more abroad and old investors are taking their money back.
