Foreign funds continue to bring in dollar inflows and are making large investments in the Indian markets. In fact, since the beginning of the year, foreign institutional investors have bought shares worth Rs 44,000 crores. Despite this, there has been a sharp depreciation of the rupee in the last one week, due to persistent demand for dollars from oil importers.
Rising price of crude, which accounts for the the largest share of imports has been one of the main factors in the depreciation of the rupee. Oil prices have rallied almost 17%, with Brent now breaching the $125 per barrel mark in trading on Monday.