Us Dollar increase Against Rupee at 70 first time in history. It has shown a downfall of 10 percent in the year 2018, tumbling to a record low. The rupee slipped as much as 0.2 percent to 70.08% per Dollar in Mumbai leading to US Dollar increase and has been one of Asia’s worst performer. The Rupee has been hit the hardest across Asia due to the recent Turkey-led-sell-off in the emerging assets. All the credit goes to the wide-current account deficit that’s already affected by the higher oil prices.
US Dollar increase against rupee creating a state of turmoil within the Nation
The crashes in the Indian National Currency have direct implications over The Reserve Bank of India as this could definitely complicate their role of keeping the rate of Inflation in control. As per the records, The RBI’s Monetary Policy Committee headed by Governor Urjit Patel has increased the interest rates twice since June to suppress price pressures, along with the usage of foreign reserves to keep a check on currency volatility.
Aditi Nayar, the principal economist at ICRA Ltd. in Gurugram, near New Delhi, wrote in a note “The RBI is likely to assess the trend in the rupee vis-a-vis the EM currency pack. If all EM currencies are depreciating, the rupee must weaken to protect export competitiveness.”
Fall in Indian Currency, US Dollar increase
On Monday, the rupee steeply dropped by 1.08, or 1.57 percent, to a record low of 69.91 against the US currency. All the emerging markets’ have come under pressure due to the turmoil of the currency crisis in Turkey.
The latest data indicated that the retail inflation fell to a 9-month low of 4.17 percent in July on slumping vegetable prices which may propel RBI to pause interest rate hike in its next monetary policy review.
As per the Clearcorp Dealing Systems data, the rupee opened at 69.80 against the US Greenback, which was comparatively stronger than Monday’s close of Rs. 69.93. But it soon dropped off crossing the crucial threshold of Rs. 70 to a dollar mark.
Impact of Rupee depreciation on the Indian Economy
This new record shall have an adverse impact on the investment and budget policy of the country.
Apart from this, it shall also hit your study abroad plans or any vacations too. Commodities which are imported like fuel or medicines that depend on imported products for their manufacturing will become expensive. These may also include FMCG Products like soaps and detergents, which use crude oil as the base, as well as electronic goods and cars, which depend on imports. The fall in INR shall result in shrinkage of salaries for many, especially in the industries which depend on imports. This shall also raise the Inflation rates. It may be concluded that the exporters shall be benefited and importers shall suffer due to this great fall. Moreover, a declining rupee adds to the pressure on corporate margins through higher imported input costs.
And if the rupee continues to fall or stay around these levels for a period of time, it shall have an adverse impact on the economy. India being one of the developing countries with high inflation, depreciation of the country is quite natural. Depreciation of INR is good until and unless it turns volatile. The latest trends in the Indian economy indicates the difficulties and damages caused by random depreciation.
EFFECT OF DEPRECIATION On Us Dollar Increase Against Rupee at 70
The imports shall turn costlier leading to widening of Trade deficit, causing direct implications on Current Account deficit. Subsidy for fertilizers shall rise. Capital inflow will either slow or reverse. Putting more pressure in Rupee, Forex reserves could fall.
The decline in rupee affects everyone in the economy, the reason being it, directly and indirectly, is leading to inflation. This shall hit the common people hard. The government should concentrate on correcting the economic fundamentals rather than indulging themselves in matters of least concern. Instead of blaming The
Reserve Bank of India, the Government should coordinate with them. There is political chaos going on in the country with people taking great interest in various parties and their arguments. The foreign investors are losing confidence. All the parties shall re-unite to gain back the confidence of the Investors for the sake of the country and its people.