The Indian rupee fell on Tuesday, 4 June 2024, after vote counting showed that the Bharatiya Janata Party-led alliance would win a narrower majority than expected. It depreciated 26 paise and came down to 83.40 against the dollar. The Indian currency settled at 83.14 against the dollar on Monday, 3 June 2024. This depreciation greatly impacted investors. The rupee ended at 83.53 against the dollar, making it the worst fall in a single day since February 2023.
Some state-run banks were spotted providing dollars near 83.50 levels on behalf of RBI (Reserve Bank of India). According to traders, the RBI took this step to limit the decline of the rupee.
A foreign exchange trader said at a large private bank that sales were intended to block outflows instead of lowering the dollar-rupee pair.
Indices whooped amid concerns about the election outcome. The Nifty 50 had its worst day in four years, and Indian bond yields grew.
Shreya Sodhani, the regional economist at Barclays Bank, said on this matter, “Markets reacted negatively due to the smaller-than-expected mandate and (PM Modi’s) Bharatiya Janata Party not achieving a majority on its own. She added, “The government is still likely to be stable, but markets will likely take a while to gain confidence in the new government.”
The Election Commission of India website showed that Narendra Modi was far behind the prediction by exit polls.
Indian markets were worried that a slimmer mandate for the BJP-led alliance could hinder the implementation of further economic reforms.
On Monday, June 3, 2024, foreign institutional investors (FIIs) followed the exit poll, which predicted a mandate for the NDA alliance in the range of 300 to 350 seats. FIIs bought Indian equities worth Rs 23,451.26.
