Rupee-Dollar Update: Rupee slips 15 paise to close at record low of 79.97 per dollar, know what next
Rupee-Dollar Update: The rupee has touched a historic low of 80 per dollar against the US currency. The rupee on Monday closed 15 paise lower at a record low of 79.97 per dollar at the interbank foreign exchange market. The Finance Ministry informed in the Lok Sabha today that the rupee has depreciated by more than 25% against the dollar between 2014 and 2022. Withdrawal of investment of foreign investors from the stock market is a major reason for the weakness of the rupee.
Current account deficit likely to widen
The rupee has come down near the psychological low of 80 per dollar against the US currency due to the possibility of increasing the country’s current account deficit (CAD) due to the breakdown of the rupee and due to the outflow of foreign funds. Analysts say that the correction in crude oil prices during the last few days has brought some relief to the local currency. The Finance Ministry had said on Thursday that the current account deficit situation has worsened due to costlier imports and weak exports of goods.
How far can the rupee break?
According to Bank of America, the Indian rupee can break to 81 per dollar by the end of the year. The Indian rupee has depreciated more than 9% so far this year. The strengthening of the dollar and the rise in crude oil prices have worked to weaken the rupee. India imports about 80% of its crude oil requirement. This has put pressure on the rupee.
What will be the effect of weakness in rupee
India imports everything from oil to essential electric goods and machinery along with other gadgets including mobile-laptops. Due to the weakening of the rupee, the import of these items has to pay a higher amount. Due to this the price of these items is increasing in the Indian market. India buys 80 per cent of its crude oil requirement from abroad. It is also paid in dollars and due to the cost of dollars, the rupee will cost more. Due to this, freight will be expensive, due to its effect, inflation will be hit further on everything needed.
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