Indian rupee ended considerably lower on Wednesday due to sustained outflow of foreign funds and increased demand for American currency from importers and banks. Sentiments remained down-beat as ratings agency India Ratings and Research stated that India’s fiscal deficit is likely to breach the government’s target of 5.9% in FY24 owing to higher revenue expenditure and lower than budgeted nominal GDP. It noted that although higher tax and non-tax revenue collections may offset the shortfall in divestment earnings, a likely second supplementary demand for grants will upset fiscal calculations, pushing the deficit to 6% of GDP. Besides, a robust buying trend in the domestic equity market failed to boost sentiment as investors remained concerned over volatile crude oil prices fearing disruption in global trade through the Red Sea route. On the global front, dollar slipped to a five-month low on Wednesday and the euro touched a four-month peak on expectations that the Federal Reserve could soon cut interest rates, but thin year-end trading flows limited moves.
Finally, the rupee ended at 83.35 (Provisional), weaker by 16 paise from its previous close of 83.19 on Tuesday. The currency touched a high and low of 83.35 and 83.20 respectively.
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