Mumbai: In early trading on Friday, the Indian rupee strengthened by 9 paise to 83.69 against the US dollar, bouncing back from its record low, thanks to a positive performance in the local stock market.
Forex traders noted that the increase in capital gains tax by the government led to foreign fund outflows from Indian equities, which put pressure on the local currency and limited its upward movement. In the interbank foreign exchange market, the domestic currency started at 83.72 to the American currency, then increased to 83.69 against the American currency, showing a 9 paise increase from its last closing value.
On Thursday, the rupee hit an all-time low of 83.78 against the US dollar after falling by 7 paise. The rupee is still facing significant pressure, staying close to its lowest levels ever. This tension is a result of the government's recent choice to increase the tax rate on capital gains, causing significant outflows of Foreign Institutional Investments (FIIs). Amit Pabari, MD of CR Forex Advisors, stated that the Reserve Bank of India (RBI) has been consistently limiting losses and stabilizing the rupee around 83.75 to prevent further depreciation.
At the same time, the dollar index, which measures the strength of the US dollar against six different currencies, stood at 104.30, showing a decrease of 0.05 per cent. Brent crude futures, which is the worldwide oil benchmark, increased by 0.18 percent to reach USD 82.52 per barrel.
In the Indian stock market, the 30-share BSE Sensex was at 80,331.51 points, up by 291.71 points or 0.36 percent. The larger NSE Nifty increased by 114 points, equivalent to 0.47 percent, reaching 24,520.10 points. According to data from the exchange, Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Thursday, selling shares worth Rs 2,605.49 crore.
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