The Indian rupee fell below the 84-per-dollar mark for the first time on Friday, driven by rising oil prices and the withdrawal of foreign investments from domestic equity markets. By 12:20 p.m. IST, the rupee had reached 84.07, before slightly recovering to 84.0425.

This decline is notable as the Reserve Bank of India (RBI) had been defending the 84 level for over two months. Although the currency had bounced back to 83.50 two weeks ago, its outlook worsened due to the Middle East conflict pushing oil prices higher and reduced hopes of a large U.S. rate cut.

Foreign investors have been heavy sellers of Indian equities over the past nine sessions, with Brent crude oil prices surging by more than 10% in October. Despite multiple interventions by the RBI to stabilize the rupee, pressure from rising trade deficits and a shrinking balance of payments surplus has made the currency more vulnerable.

In August, India's merchandise trade deficit reached a 10-month high of $23 billion, driven by increased gold imports and slowing exports. This has widened the current account deficit to $9.7 billion in the April-June quarter, up from $8.9 billion last year.

While other Asian currencies have gained over the past two months, the rupee has remained largely flat. With the U.S. Federal Reserve likely to opt for a 25-basis-point rate cut in November rather than a larger reduction, the rupee could face further pressure. However, experts suggest the RBI will allow only marginal depreciation to maintain the rupee’s stability.