Top News

• The rupee fell against the dollar
• This is putting pressure on the rupee
• What exactly is RBI doing?

Indian Rupee VS US Dollar : The Indian Rupee is continuously hitting new lows. On Wednesday, the rupee fell to 95.80 against the dollar, considered its weakest level ever. Earlier, the rupee had closed at a record low of 95.68 on Tuesday. In other words, in a span of just two days, the Indian currency has hit a new low for the second time. Due to this continuous fall of rupee, a new discussion has erupted in the market. A question is now gaining momentum among investors and traders: has the RBI softened its aggressive stance on defending the rupee? Petrol-Diesel will explode? Initially the Petroleum Minister and now the RBI Governor gave the signal

What is the pressure on the rupee?

The biggest pressure on the rupee has come from rising crude oil prices. Brent Crude is trading above the $100 level due to rising tensions between the US and Iran. As a large portion of India’s energy needs are imported, rising oil prices directly boost demand for the US dollar. Moreover, ‘foreign institutional investors’ are steadily withdrawing their capital investments from the Indian market. When FIIs sell their investments in Indian equities and bonds, demand for dollars increases; This weakens the rupee. On the other hand, as the US Dollar Index is also in a strong position, other currencies around the world are under pressure.

What exactly is RBI doing?

RBI Governor Sanjay Malhotra has already clarified that the central bank is not trying to maintain the rupee at any specific or fixed level. RBI’s entire focus is on preventing undue panic and volatility in the markets. Hence, the process of intervening in the market and particularly, selling dollars every now and then when there is a minor fall in the value of the rupee seems to be taking place less and less. According to experts, if the RBI continues to sell dollars, it could put increasing pressure on the country’s foreign exchange reserves. As a result, the current policy is to allow the rupee to adjust itself gradually.

What will be the effect on the pocket of common people?

A weak rupee has a direct impact on the common man’s pocket. If the dollar appreciates, it becomes more expensive for India to buy imported goods such as oil, gas and electronics. The impact of this is seen in various commodities ranging from petrol and diesel prices to mobile phones, laptops and home appliances. Moreover, it also increases the risk of inflation. If inflation remains high for a long period of time, it may be difficult for RBI to cut interest rates. As a result, hopes of relief in home loan and auto loan installments are also likely to be delayed.

What is the focus of the market right now?

Currently, the market is focused on three main factors. The first factor is the level to which tensions between the US and Iran escalate. Another factor is how long crude oil prices remain high. And the third factor is when and how aggressively the Reserve Bank intervenes. Many brokerages are now predicting that the rupee may depreciate to 96-97 against the dollar. If oil prices remain high and foreign investors continue to sell, pressure on the rupee may increase in the coming period.

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