Currency Market Update: Rupee slips to all-time low of 83.72 vs dollar in early session

Currency Market Update: Rupee opened on a muted note and fell to an all-time low of 83.72 against the US dollar on Thursday, dragged down by the strength of the American currency in the overseas market and significant foreign fund outflows.

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.

"Post-budget day, the benchmark Indian equity indices, BSE Sensex and Nifty 50, dipped by approximately 0.3 per cent and 0.2 per cent, respectively, as foreign institutional investors withdrew a staggering USD 350 million from Indian stocks.

"Adding to the turmoil, persistent high demand for dollars, driven by defence and oil payments, compounded the currency's woes," CR Forex Advisors MD Amit Pabari said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was at 104.21, lower by 0.17 per cent.

Brent crude futures, the global oil benchmark, fell 0.75 per cent to USD 81.10 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 425.14 points, or 0.53 per cent lower at 79,723.74 points. The broader NSE Nifty was down 120.65 points, or 0.49 per cent, to 24,292.85 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Wednesday as they offloaded shares worth Rs 5,130.90 crore, according to exchange data.