Rupee steady; market awaits clarity on some budget policies

Reuters: The rupee closed little changed on Monday as dollar conversions by exporters were offset by importer demand for the US currency and investors waited for more clarity on some budget policies announced last week, dealers said.

The Government imposed new taxes on motor vehicles, telecoms, banks and liquor in a bid to boost revenues, in its 2018 Budget outlined on Thursday, as the budget deficit for the current year slipped to 5.2% of GDP.

The spot rupee closed at 153.57/65 per dollar, compared with Friday’s close of 153.55/60.

“Market is waiting for clarity on some budget policies,” a currency dealer said asking not to be named.

“The profitability of banks is going to come down with the proposed tax on bank transaction. Then there is uncertainty over vehicle taxes. Anyway vehicles will not move until December. Until then we will see dollar demand due to general imports.”

Finance Minister Mangala Samaraweera announced on Wednesday tax concessions worth a monthly Rs. 1.5 billion.

The rupee has slipped 2.7% so far this year.

Foreign investors had invested a net Rs. 18.7 billion ($ 121.74 million) in equities this year as of Monday’s close, and Rs. 44.3 billion in government securities as of 8 November, official data showed.