Rupee Hits Record Low: A big fall in the rupee is being seen today amid increasing tension between America and Iran, rising price of crude oil and global uncertainties. Today, on March 27, the rupee has fallen to its lowest level in history against the dollar and has crossed Rs 94.28 per dollar.
Why is the rupee lagging behind the dollar so much?
- There is no sign of the war between America, Israel and Iran ending. Due to the fear of war and its prolongation, the prices of Brent crude in the international markets have crossed $ 100 per barrel. India imports about 88 percent of its oil needs. In such a situation, the demand for dollars has suddenly increased.
- In this environment of global uncertainty, investors are withdrawing money from risky investments like Indian stock market and investing it in US dollars. Due to this the demand for dollars has also increased. The dollar is seen as a ‘safe haven’.
- Foreign institutional investors are continuously exiting by selling Indian shares. Since the start of the war in Iran, foreign investors have sold about $5 billion to $8 billion from the Indian market.
- Iran has placed before America the condition of sovereign control over the Strait of Hormuz. Iran’s threat to close this important sea route has raised questions about energy supply, which is scaring investors.
impact on common man
- If the rupee weakens against the dollar, then goods ranging from crude to edible oil, mobiles, electronics will become expensive because India imports these things on a large scale, for which payment is made in dollars. If the rupee weakens, India will have to pay more against the dollar.
- Generally, if inflation increases, then to control it, RBI can increase the repo rate in the coming time. Due to this, your EMI on the loan may become expensive.
- Due to falling rupee, expenditure on foreign travel and study abroad or medical treatment may increase because now more rupees will have to be paid against the dollar.
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