The Indian rupee plunged to an all-time low of ₹83.72 against the US dollar in early trading on Thursday, pressured by a stronger dollar in global markets and significant foreign fund outflows. This decline was exacerbated by a downturn in Indian equities following the government’s recent decision to increase the capital gains tax rate.
In the interbank foreign exchange market, the rupee opened at its historic low of ₹83.72 against the dollar, marking a slight drop of 1 paisa from the previous close. The currency had already depreciated by 2 paise to an all-time closing low of ₹83.71 against the dollar on Wednesday.
Forex traders attributed the rupee’s fall to the weakened sentiment in domestic markets, triggered by the tax rate hike on capital gains. This policy change has put substantial pressure on both the rupee and the equity market.
Amit Pabari, MD of CR Forex Advisors, noted, “Post-budget day, the benchmark Indian equity indices, BSE Sensex and Nifty 50, dipped by approximately 0.3% and 0.2%, respectively, as foreign institutional investors withdrew a staggering USD 350 million from Indian stocks. Adding to the turmoil, persistent high demand for dollars, driven by defense and oil payments, compounded the currency’s woes.”
Meanwhile, the dollar index, which measures the strength of the US dollar against a basket of six currencies, was at 104.21, down by 0.17%. Brent crude futures, the global oil benchmark, also fell by 0.75% to USD 81.10 per barrel.
In the domestic equity market, the 30-share BSE Sensex was trading 425.14 points, or 0.53%, lower at 79,723.74 points, while the broader NSE Nifty declined by 120.65 points, or 0.49%, to 24,292.85 points.
Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday, offloading shares worth ₹5,130.90 crore, according to exchange data.
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