The Indian rupee suffered an intense plunge and closed at a near two-week low of 64.06 against the US dollar after the government announced long-term capital gains (LTCG) tax on equities and widened its fiscal deficit target while unveiling the Union Budget.<\/p>\n
Forex market sentiment turned highly volatile and reacted vehemently to some key Budget announcements triggering panic dollar buying by corporates and importers.<\/p>\n
The home currency settled the week with a sharp 51 paise, or 0.80%.<\/p>\n
Unveiling the Budget 2018-19, Finance Minister Arun Jaitley projected a higher fiscal deficit of 3.5% of the GDP for 2017-18, as against the target of 3.2%.<\/p>\n
Besides, the Centre introduced long-term capital gains tax of 10% on stock market gains exceeding Rs 1 lakh and the net borrowing for the current fiscal was also steeply raised to Rs 4.79 lakh crore as against the Budget estimate of Rs 3.5 lakh crore.<\/p>\n
It was a double-whammy for the Indian currency following the FOMC announcement hit hard by hawkish Federal Reserve policy and a sudden rise in global crude prices, adding to worries about rates rising too quickly.<\/p>\n
The FOMC held interest rates unchanged in line with market expectations but the accompanying statement was a bit more hawkish on the economy and inflation warranting further rate hikes in 2018.<\/p>\n
The volatile situation was further aggravated by heavy losses in the domestic equity markets which witnesssed carnage following post-Budget sell-offs amid global crash.<\/p>\n
Both the benchmark indices pulled back nearly 3% in the bloodbath.<\/p>\n
The rupee started the week on a subdued note at 63.60 against last Thursday\u2019s close of 63.55 at the Interbank Foreign Exchange (forex) market due to month-end dollar demand amid firm greenback overseas.<\/p>\n
It traded in a tight range early part of the week before taking a knock reacting to post announcements of budgetary proposals.<\/p>\n
The home currency plunged to a fresh one-month low of 64.20 on Thursday before ending at 64.06, showing a loss of 51 paise, or 0.80%.<\/p>\n
Though, the rupee touched a high of 63.48 briefly.<\/p>\n
The RBI, meanwhile fixed the reference rate for the dollar at 64.0781 and for the euro at 80.0335.<\/p>\n
In the meantime, country\u2019s foreign exchange reserves rose sharply by USD 3 billion to touch a new life-time high of USD 417.789 billion in the week to January 26, the RBI said.<\/p>\n
Foreign funds and overseas investors continued their portfolio buying spree and infused USD 248.05 million during the week.<\/p>\n","protected":false},"excerpt":{"rendered":"
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