The Indian rupee fell to 82.7750 to the dollar from the previous day’s 82.36.
“There was absolute panic buying in the dollar as the RBI (Reserve Bank of India) broke away from the 82.40 level it was guarding,” said a commercial bank trader.
The global economic slowdown is the main factor contributing to both the stock market decline and the Indian currency depreciation. The Indian rupee fell irreversibly due to the economic slowdown. Therefore, conversion from USD to INR is always lossy. The rate of the rupee against the U.S. dollar has always been a disappointment due to the global economic slowdown, causing sudden losses for some businessmen.
The country’s inflation rate has a significant impact on the currency rate. The exchange rate between the U.S. dollar and the Indian rupee is unfavorable since the Indian economy as a whole is in disarray, and the inflation rate doesn’t appear to be declining or stabilizing. The ongoing turbulence caused by the rupee’s decline in value vs. the U.S. dollar causes several problems for the nation’s economy, making it cause for concern.
The ongoing Ukraine crisis, the U.S. Federal Reserve’s increase in interest rates, and investors dumping Indian equities to acquire foreign ones are just a few of the many causes that are said to be to blame for the rupee’s decline.
Financial experts say that with global inflation rising and domestic growth slowing, investors typically sell Indian assets and move funds to U.S. markets for greater safety and yield.
They added that the rupee is declining against the dollar, mainly because the trade deficit is widening as imports are growing much faster than exports.
The Indian economy and common people would be impacted by the rupee’s decline versus the dollar. As the value of the rupee declines against the U.S. dollar, the government, businesses, and residents are all generally required to make more financial contributions.
However, a stronger dollar implies that you will require more Indian rupees to purchase it than you did previously.
The depreciation of the rupee affects Indians’ personal finances directly and indirectly.
India is primarily an import-dependent country; hence the effects of a depreciating rupee are more serious. Moreover, rupee depreciation is one of the current factors causing growing inflation as imported products become more expensive.