MUMBAI: The Indian rupee slipped to record lows on Tuesday as the government raising tax rates for capital gains from equity investments and on equity derivative trades hurt market sentiment.

The rupee ended slightly lower against the US dollar at 83.6875, its weakest ever closing, after having slipped to a record low of 83.7150 earlier in the session.

Likely intervention from the Reserve Bank of India helped cap the currency’s decline. The central bank likely sold dollars near 83.70-83.72 levels via state-run banks, traders said.

India’s benchmark equity indexes, the BSE Sensex and Nifty 50, ended slightly lower after dropping more than 1% earlier in the day.

While the rupee saw a “knee-jerk” reaction to the drop in equity markets, the RBI is unlikely to allow a sharp rise in volatility, a trader at a foreign bank said.

The rupee is expected to see gradual deprecation and trade in a 83.57-83.77 band over the rest of the week, Dilip Parmar, a foreign exchange research analyst at HDFC Securities said.

India’s budget for fiscal year 2024-25 struck a balance between higher spending on jobs and rural development while lowering the fiscal deficit target.

The government lowered its fiscal deficit target to 4.9% of gross domestic product, below the 5.1% aim in February’s interim budget. It also reduced its gross market borrowing marginally to 14.01 trillion rupees.

Most Asian currencies nudged higher on Tuesday and the dollar index was up slightly at 104.3.