Dollar vs Rupee: Amid rising tensions in the Middle East and rising crude oil prices, the Indian rupee fell sharply on Friday to its lowest ever level of 94.82 per dollar. The rupee opened at 94.18 in the interbank foreign exchange market, but after being under pressure throughout the day, it fell further and closed at a record level. Earlier it had fallen to the level of 93.96, which was the lowest level at that time.
The main opposition party Indian National Congress has targeted the central government over this historic fall in the rupee. Congress, while sharing an old video of Prime Minister Narendra Modi, raised questions on the current situation and criticized the economic policies of the government.
The party says that the weakness of the rupee raises questions on the country’s economic condition and policy management. At the same time, the government usually cites global reasons like rise in crude oil prices, dollar strength and geopolitical tension as the main reasons in such cases.
Record fall in rupee
The main reasons for this decline are believed to be the continuous selling by Foreign Institutional Investors, the strengthening of the dollar and the ongoing geopolitical tension in the Middle East. The strength of the dollar globally is also putting pressure on the rupee, where the dollar index remains in the lead against six major currencies.
The effect of this instability was clearly visible in the domestic stock markets also. BSE Sensex fell by more than 1,690 points or 2.2 percent and closed at 73,583, while Nifty 50 also recorded a decline of about 487 points. This weakness in the market was seen due to withdrawal of foreign investors and global uncertainty. Due to heavy selling, investors lost about Rs 8.5 lakh crore.
stock market crash
At the same time, the prices of Brent Crude Oil in the international market have increased to around $ 109.8 per barrel, which is putting additional pressure on import-dependent countries like India. High prices of crude oil not only increase inflation but also have a negative impact on the current account deficit and currency.
It is noteworthy that whenever the Indian Rupee weakens, it has a direct impact on inflation. Imported goods become expensive, especially crude oil, due to which the prices of petrol, diesel and everyday items may increase. This also increases the fiscal deficit of the government, because there is pressure on both subsidies and import bills. Additionally, expenses increase for students studying abroad as they have to pay more in dollars.
However, the fall in rupee also has a positive aspect. This benefits the exporters because they get paid in US Dollars and due to the weak rupee, they get more rupees. This can boost export-based sectors like IT, pharma and textile. That is, until the tension in West Asia does not subside and crude oil prices stabilize, the rupee is expected to remain under pressure.
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