The Indian currency trades lower intraday on Wednesday amid weak monsoon and exodus of foreign institutional investors from the country after Finance Minister imposed a higher surcharge on super-rich with an annual income of at least 2 crores.
The Indian currency trades lower intraday on Wednesday amid weak monsoon and exodus of foreign institutional investors from the country after Finance Minister Nirmala Sitharaman imposed a higher surcharge on super-rich with an annual income of at least 2 crores per annum in her maiden budget. Today, the Indian rupee opened at 71 a dollar against the previous close of 70.40 a dollar but then appreciated to 70.85 a dollar intraday before falling to 71.31. Yesterday, the rupee plummeted 62 paise to end at a nearly six-month low of 71.40 against the US dollar tracking lower equity markets and global cues. According to analysts, though the international factors are supporting the currency, it’s the domestic factors which are weighing on the rupee and may impel it to touch 72.50 a dollar by the month-end.
“Though as per IMD the monsoon deficit as predicted earlier has recovered. But floods in many regions of the country don’t augur well for the markets. India’s fall in the global GDP ranking is also putting pressure on the rupee. The FIIs have also been withdrawing from India owing to the imposition of the higher surcharge. Besides that, the fresh tensions with Pakistan after scrapping of article 370 of the Indian constitution is negative for Rupee. Considering all these factors the rupee may fall to 72.50 by the month-end,” Ajay Kedia, Director at Kedia Commodity told Financial Express Online.
After the government didn’t issue a clarification about the recently held a meeting last week on FPI surcharge, the investors are not expecting a rollback of the budget proposal. As of now in August the foreign investors of As on Aug 13, the foreign institutional investors (FIIs) were net sellers and pulled out Rs 638.28 crore, according to provisional data of NSE. The consumer price index-based retail inflation softened marginally to 3.15 per cent in July on the back of declining fuel and light prices, according to government data. However, the overall food prices moved up.