Indian rupee fell sharply on Thursday and closed at 49.57/58, the lowest in 28 months as a sell-off in global equities ignited fears of foreign fund outflows.
At 11:54 am IST, the Indian Rupee was seen trading at 49.71 against dollar after touching 50 a while ago. (Data from NSE Forex Tracker)
Dollar has strengthened its value against all major currencies of the world after Fed's stimulus plan. Investors are seeking safety of haven in the greenback.
After Fed announced that it will re-balance its balance sheet with more long-dated treasury securities with that of short-dated ones, investors started accumulating dollars by diversifying their exposure from riskier assets like equities to dollar.
No more new money printing in US also raised the demand for dollar up in global markets with investors seeking more and more dollars.
Indian importers also bought dollars on fears that exchange rate may rise further and they might end up paying more for their imports.
On the flip side, fall in rupee is a boon for exporters such as IT companies who are taking full advantage of this current currency fluctuation but on the cautious note they have also hedged their positions against any rise as they feel that the current rupee fluctuation can only provide short-term gains.