Rupee falls to record low of 83.72 against US dollar

Rupee declines: The rupee fell by 1 paisa to close at an all-time low of 83.72 (provisional) against the US dollar on Thursday. This decline was driven by demand for the American currency in the overseas market and significant foreign fund outflows.

Forex traders attributed the drop in the domestic unit to a notable downturn in Indian equity markets, following the government's decision to increase the tax rate on capital gains.

At the interbank foreign exchange market, the rupee opened at 83.72, reaching an intra-day high of 83.66 and a low of 83.72 against the dollar during the session. It ultimately settled at an all-time low of 83.72 (provisional) against the American currency, down by 1 paisa from its previous close.

On Wednesday, the rupee had depreciated by 2 paise to reach its all-time closing low of 83.71 against the US dollar.

Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, noted that the local unit saw slight appreciation during intra-day trade, potentially due to intervention by the Reserve Bank of India (RBI) and overall weakness in crude oil prices.

"We expect the rupee to trade with a slight negative bias due to weak global markets and fresh FII outflows. However, a weak US dollar and declining crude oil prices may support the rupee at lower levels. RBI intervention may also provide support," Choudhary added.

The government's decision to hike the tax rate on capital gains dampened market sentiment, exerting significant pressure on the rupee and the equity market.

In the domestic equity market, the 30-share BSE Sensex fell by 109.08 points, or 0.14 per cent, to settle at 80,039.80 points, while the Nifty dropped by 7.40 points, or 0.03 per cent, to 24,406.10 points.

Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was at 104.17, down by 0.21 per cent.

Brent crude futures, the global oil benchmark, fell by 1.79 per cent to $81.25 per barrel.

Foreign institutional investors (FIIs) were net sellers in the capital markets on Wednesday, offloading shares worth Rs 5,130.90 crore, according to exchange data.

(With PTI inputs)