The Indian rupee fell to an all-time low of 83.72 (Dh22.81) against the US dollar on Thursday, dragged down by dollar’s strength in the overseas market and significant foreign fund outflows.
It is the fourth day in a row that the currency has hit a low. The Reserve Bank of India has intervened regularly to support the rupee, capping its decline.
“While we keep making fresh highs (on dollar/rupee), there is no way you can think of a breakout,” a currency trader at a banks. “The RBI is doing what it does, and managing the extent of price moves.”
Forex traders said the fall in the domestic unit came on the heels of a significant downturn in the Indian equity markets, sparked by the government’s decision to hike the tax rate on capital gains.
At the interbank foreign exchange market, the local unit was trading in a narrow range. It opened at an all-time low of 83.72 against the American currency, registering a fall of 1 paisa from its previous close.
On Wednesday, the rupee depreciated 2 paise to hit its all-time closing low of 83.71 against the US dollar.
The government’s decision to hike the tax rate on capital gains dampened market sentiment, exerting immense pressure on the rupee and the equity market.