The Indian rupee on Thursday hit a historic low against the US dollar amid firming overseas markets. On Thursday, the Indian rupee fell by 18 paise, due to which it reached the lowest level ever. The Indian currency closed at 79.9975 against the dollar in the forex market while wholesale inflation remained in double digits for 15 consecutive months till June.
However, analysts said, however, a sharp fall in crude oil prices in the past few days has given relief to the rupee. The Indian Rupee has become the average performer among regional currencies. In the interbank foreign exchange market, the rupee opened with a strong trend at 79.71 per dollar at the beginning of the day. During trading, the rupee went up to a high of 79.71 and came down to a low of Rs 79.99. Finally, the rupee closed at 79.99 per dollar, down by 18 paise from the previous closing price.
Wholesale price-based inflation eased to a three-month low of 15.18 per cent in June on sharp fall in mineral prices, but food inflation is picking up. June is the 15th consecutive month when wholesale inflation remained in double digits. Last month, wholesale inflation touched a record high of 15.88 per cent. In June 2021, the wholesale inflation rate was 12.07 percent.
Meanwhile, the Finance Ministry has said that India’s current account deficit is likely to worsen in the current financial year due to costly imports and weak merchandise exports. To meet the financial needs of CAD and rising FPIs, foreign exchange reserves have declined by USD 34 billion in the six months since January 2022.
Analysts say US inflation is at a 41-year high. Due to the ongoing war between Russia and Ukraine, the demand for the dollar is increasing amid the volatility in the global market. Various sanctions have been imposed on Russia due to war. Due to this, the demand for dollars for trading is increasing continuously, due to which the dollar has reached the strongest position in 20 years. Its direct effect is also visible on the rupee.
Importers will suffer losses, exporters will benefit:
Importers will be hurt by the fall in rupee, while exporters will benefit. On importing any item, we have to pay more rupees in dollars. Traders will get more rupee in terms of dollar in exports.
Pressure will continue:
Dilip Parmar of HDFC Securities said raising interest rates by central banks across the world and higher demand for dollars put pressure on the rupee in the April-June quarter. This decline may continue even further and the rupee may cross 79.10.
Analysts say the RBI may need to change the way it handles the rupee’s fall, as its approach so far has only accelerated the rupee’s fall.
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