Rupee Drops 41 Paise, Closes at 84.56

The Indian rupee fell 41 paise to close at 84.56 against the U.S. dollar on Thursday, extending its recent slide as pressure builds on India's external accounts. Forex traders said the currency has already weakened sharply, pricing in a likely widening of the Current Account Deficit and volatile capital flows. The Current Account Deficit measures how much more India pays to the rest of the world than it receives, a wider gap typically puts downward pressure on the rupee. Traders are watching whether foreign investors continue pulling money out of Indian markets, since sustained outflows reduce dollar supply and push the rupee lower. A weaker rupee raises the cost of imports, especially oil, which India buys in dollars, and can feed into broader inflation. The pace of any further slide will depend on how capital flows stabilize and whether the Reserve Bank of India steps in to support the currency.