Economists and investors are becoming concerned as the indian rupee has fallen to its lowest level ever compared to the US dollar. The rupee saw its worst performance in over two years on monday, dropping 58 paise to ₹86.62 vs the dollar. Rising crude oil prices and the US dollar's strengthening are to blame for this steep drop.
 
Why did the Rupee fall?
Early monday trade saw the rupee fall, with the interbank foreign currency market opening at ₹86.12. It fell 58 paise against the dollar to ₹86.62 at the middle of the day. The rupee has dropped so precipitously in a single day for the first time in over two years.
 
The Reasons behind this drop include:

1. Stronger US Dollar : The dollar has been gaining strength globally, putting pressure on emerging market currencies like the rupee.

2. Rising Crude oil Prices: india, being a major importer of crude oil, is heavily impacted by increasing oil prices, which further weakens the rupee.

Rupee’s Performance Over the Years
For a some now, the rupee has been declining. It dropped 68 paise against the dollar on february 6, 2023, and by december 30, 2024, it was worth ₹85.52. The value of the rupee has dropped by around ₹1 in only the last two weeks. netizens criticize Modi & his inefficient government for ruining india with religious politics as the economy is crumbling.

Impact on Foreign Investments
Foreign investments in the indian stock market have significantly decreased as a result of the rupee's decline. Last Friday, ₹2,254.68 crore was taken out by Foreign Institutional Investors (FIIs) in a single day. A total of ₹22,194 crore has been taken out of indian markets by FIIs so far in January.
 
To stabilize the rupee, the bank OF INDIA' target='_blank' title='reserve bank of india-Latest Updates, Photos, Videos are a click away, CLICK NOW'>reserve bank of india (RBI) is anticipated to implement corrective actions. To sustain the currency and stop more depreciation, the central bank may modify its policies.
 
India's foreign exchange reserves fell by $5.693 billion to $634.585 billion as of january 3, according to recent important figures issued by the RBI. Despite this, seasonal demand and a rebound in the manufacturing sector drove a 5.2% increase in India's industrial production (IIP) in november 2024.

What’s Next for the Rupee?
Now that the rupee has fallen to historic lows, everyone is waiting for the government and RBI to act to stabilize the currency. Although issues like rising crude oil costs and a strong US dollar still exist, remedial actions and policy adjustments may be able to boost the indian economy's reputation.
 
 


 
For more interesting updates wa click and follow Indiaherald WhatsApp channel

Find out more:

Indian Rupee

G GOWTHAM

14/01/2025 08:38 AM