On Thursday, the Indian rupee plummeted to a historic low of 83.72 (Dh22.81) versus the US dollar, influenced by the robust performance of the dollar in international markets and substantial outflows of foreign funds. This marks the fourth consecutive day of decline for the currency. The Reserve Bank of India has been actively intervening to bolster the rupee, thereby limiting its fall.
"As we continue to set new records (in dollar/rupee), there's no scenario where a breakout can be anticipated," commented a currency trader at a bank. "The RBI is carrying out its usual operations and controlling the magnitude of price fluctuations."
Forex traders noted that the depreciation of the domestic currency coincided with a notable slump in the Indian stock markets, triggered by the government's move to increase the tax rate on capital gains. In the interbank foreign exchange market, the local unit was trading within a tight range. It commenced trading at a record low of 83.72 against the American currency, showing a slight decrease of 1 paisa from its last close.
On Wednesday, the rupee weakened by 2 paise, reaching its all-time lowest closing value of 83.71 against the US dollar. The government's decision to raise the tax rate on capital gains has negatively impacted market sentiment, placing significant strain on both the rupee and the equity market.
