Such depreciation puts considerable pressure on the already high import prices of crude and raw materials, paving the path for higher imported inflation and production costs besides higher retail inflation. Currently, the rupee has fallen mainly due to a rise in crude oil prices, a strong dollar overseas, and persistent foreign capital outflows.Īccording to the economic rule when a country imports more than it exports, the demand for the dollar will be higher than the supply and the domestic currency like Rupee in India will depreciate against the dollar.Īs money flows out of India, the rupee-dollar exchange rate gets impacted, depreciating the rupee. The moment demand for the US dollar increases the value of the rupee depreciates. The value of the Indian Rupee to the US dollar works on the demand and supply factor. The statement that the rupee has fallen to a low of 80 dollars basically means that one needs Rs 80 to buy a single dollar. The country is already grappling with high inflation and weak growth now this fall of the rupee has become a cause of concern and a challenge for policymakers.įinance minister Nirmala Sitharaman on Monday said, “Global factors such as the Russia-Ukraine war, soaring crude oil prices, and tightening international financial conditions are the major reasons for the weakening of the rupee against the dollar.” She further added, “global currencies such as the British pound, the Japanese yen, and the Euro have weakened more than the Indian rupee indicating that the Indian rupee strengthened against these currencies in 2022.” The big question now to seek an answer is what will be the impact of the falling Indian rupee against the dollar? Understanding what the ‘fall of rupee’ means?
Ever since the war started in Ukraine, followed by the rising price of crude oil, the rupee has steadily lost value against the dollar. dollar in early trade on Tuesday recording at 80.05 per dollar, further deteriorating the economy.įor the first time in a decade, the dollar reached its highest value in the first half of the year 2022, buoyed by various conflicts among countries and the Russia-Ukraine war. While the country was gradually inching back on track after being mangled by the pandemic followed by a series of lockdowns, the Indian rupee hit an all-time low against the U.S.
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