New Delhi: Rupee began trading quietly and dropped to a record low of 83.72 versus the US dollar on Thursday, as the strong US currency in the international market and substantial outflows of foreign funds weighed on it. According to Forex traders, the decline in the local currency followed a major drop in the Indian stock markets, triggered by the government's choice to increase the tax rate on capital gains.
In the interbank foreign exchange market, the domestic currency was trading within a limited range. It started at a record low of 83.72 against the US dollar, showing a decrease of 1 paisa from its last ending. The Indian rupee reached a record low of 83.71 against the US dollar on Wednesday after depreciating by 2 paise.
The increase in capital gains tax by the government negatively affected market confidence, leading to significant stress on the rupee and stock market. After the budget announcement, Indian stock market indices BSE Sensex and Nifty 50 dropped around 0.3 pc and 0.2 pc due to foreign investors pulling out USD 350 million from Indian stocks.
CR Forex Advisors MD Amit Pabari noted that the currency's troubles were worsened by the continuous strong demand for dollars, which was mainly fueled by defense and oil payments, further adding to the chaos. At the same time, the dollar index, measuring the strength of the US dollar against six other currencies, stood at 104.21, down 0.17 percent.
Global oil benchmark Brent crude futures dropped by 0.75 per cent to reach USD 81.10 per barrel.
In the Indian stock market, the BSE Sensex, consisting of 30 shares, was trading down by 425.14 points, or 0.53 pc at 79,723.74 points. The wider NSE Nifty dropped 120.65 points, representing a decrease of 0.49 pc, reaching 24,292.85 points. According to exchange data, Foreign Institutional Investors (FIIs) sold off shares worth Rs 5,130.90 crore in the capital markets on Wednesday.
FIRST Business Portal addressing the potential of business capability of North East Region.
