The Indian rupee opened steady on Wednesday after closing at a record low in the previous session due to a hike in capital gain tax and a lower fiscal deficit target in the Budget 2024.
The local currency opened at Rs 83.69 against the greenback, according to Bloomberg. On Tuesday, it closed at a record low of Rs 83.69.
“Yesterday, the increase in capital gains tax and the removal of the indexation benefit were the main reasons for dollar buying as FPI’s sold stocks,” said Anil Kumar Bhansali, head of Treasury and executive director of Finrex Treasury Advisors LLP.
It appears that after the elections, the Reserve Bank of India has decided to allow some weakness to creep into the rupee to ensure the country is competitive enough for its exports, he said.
On Wednesday, Bhansali expects the rupee to trade in the Rs 83.60–8.80 range, with exporters on the watchful side for hedging. He advised importers to buy the dollar at dips or trigger stop losses at Rs 83.70.
The dollar index, on the other hand, rose ahead of the release of US GDP data on Thursday and personal consumer expenditures data on Friday. Falling US inventories and the possibility of an imminent cease-fire agreement in the Middle East kept Brent prices stable.
The dollar index is up 0.03% at 104.4840, and Brent crude is up 0.44% at $81.37 per barrel.
