The U.S. dollar is showing no mercy to the Indian rupee in the currency markets in July. The INR nosedived to an all-time low of 83.73 last week but briefly recovered to 83.63 on Monday. However, the USD pulled the rupee down on Thursday making it fall shy to its ATH at 83.71.
The Indian rupee is losing balance against the U.S. dollar and the currency is facing macroeconomic pressures from all quarters. If the downfall continues, it could plummet to 83.80 leading to the pathway of nosediving to 84.
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It will “be a matter of concern till it is holding above 83.80,” said Sajal Gupta, Head of Forex at Nuvama Institutional. There are higher chances of that happening by the end of 2024 as the rupee is getting weaker.
Currency: Why is the U.S. Dollar Rising & Indian Rupee Falling?
The U.S. dollar is strengthening across the currency markets making leading Asian currencies nosedive. 22 out of 23 local Asian currencies have plummeted against the USD. Only the Hong Kong dollar has managed to stay afloat and duck the onslaught of a stronger dollar.
Also Read: US Dollar’s Biggest Jump Sends Local Currencies Sliding
Coming back to the Indian rupee, the currency is facing issues related to its recent budget. The taxation for both short-term and long-term increased leading to disgruntled voices in the stock markets. The tax on short-term capital gains increased from 15% to 20%, while the long-term capital gains jumped from 10% to 12.5%.
After the budget was announced, the stock market Sensex and Nifty traded in the red. It is down for two days straight and could dip further in the charts. In addition, foreign investors offloaded $350 million from the Indian stock market leading to a massive dent. The rupee is now spiraling down as the U.S. dollar is growing stronger.
Also Read: US Dollar Shows No Mercy To BRICS Nations’ Currencies
“Post-budget day, the benchmark Indian equity indices, BSE Sensex and Nifty 50, dipped by approximately 0.3 percent and 0.2 percent, respectively, as foreign institutional investors withdrew a staggering USD 350 million from Indian stocks,” said CR Forex Advisors MD Amit Pabari.
