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Why is the Indian rupee falling and how does it impact you?

prasad1

Well-known member

That the Indian rupee is falling is something headlines would have already told you this morning. But if you’re wondering why the rupee has hit an all-time low against the dollar, you’re in the right place. Thanks to the volatility in market affecting indices and individual stocks, coupled with global and domestic cues, the Indian currency has its back against the wall. Currently, the Indian rupee stands at ₹73.76 per dollar. A year ago, on October 3, 2017, one US dollar would get you ₹65.45. Whether you actively follow the markets or not, no one can remain untouched by the rupee’s fall of over 11.2 per cent in a year. A decline of such a measure is bound to affect your life directly or indirectly. So here’s a lowdown of why the rupee is falling and how it impacts you.

One of the biggest reasons the rupee is falling at this rate is the high crude oil prices, which are currently at a record $85 (₹6,270) per barrel. This is the first time in four years that crude oil prices have hit the $85 mark.

Apart from the situation regarding the crude oil prices, other factors contributing to the weakening rupee include a rapidly increasing current account deficit (CAD) which has become a thorn in the side for the Indian economy. A rise in CAD means that more quantity of the local currency is needed for payment of higher imports, which eventually leads to the depreciation of the Indian rupee. Even overseas investors were quick to pull out a massive $3 billion dollars (₹21,000 crore) from the capital markets last month, making it the deepest outflow in over four months. This eventually leads to further widening of the CAD and the fall of the Indian rupee.

A falling rupee can also lead to interest rate hikes by the RBI, which has already raised interest rates twice in 2018. A higher interest rate means higher EMIs which would make loans more expensive.

https://www.gqindia.com/content/why-indian-rupee-is-falling-against-dollar-what-is-the-impact-of-falling-rupee-on-crude-oil-fuel-price-rise-in-india/
 
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prasad1

Well-known member
[FONT=&quot]Rupee may have taken a fresh plunge on Friday but that hasn’t stopped Railway Miniser Piyush Goyal to say that it is the best period that India has seen when the currency has only depreciated by seven per cent in a five-year period.[/FONT]

Citing figures of the year 2013, the minister said the economy has been able to withstand the pressure from the international market.


Statistics and damn lies

https://www.abplive.in/india-news/rupee-at-74-against-dollar-piyush-goyal-says-depreciated-only-7-in-5-years-764224
 

biswa

New member
One thing to note is that it is not Indian rupee which is falling. The currencies of Turkey, Russia, South Africa, Brazil, Indonesia, Argentina are all falling. There is not much any govt can do in the short term, as the main cause is the rise in US interest rates, and consequent rise in the US dollar.
 

vgane

Well-known member
One thing to note is that it is not Indian rupee which is falling. The currencies of Turkey, Russia, South Africa, Brazil, Indonesia, Argentina are all falling. There is not much any govt can do in the short term, as the main cause is the rise in US interest rates, and consequent rise in the US dollar.
Issue is why should Indian Rupee depreciate against US Dollar and not the other way around...No one seems to be bothered about that...May be it requires a different monetary and fiscal policy
 

vgane

Well-known member

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