Rama Krishna Sangem
The fall of Indian rupee against the US dollar seems unstoppable. In a day or two, it will touch Rs 92 and very soon will travel towards Rs 100 mark too, if the RBI keeps away from interfering in the slide. Exporters may be rejoicing, but the impact of depreciation of rupee against the US dollar is bound to cripple our economy in many ways.
The Indian rupee December 16, Tuesday, reached an all-time low of 90.82 against the US dollar in early deals on Tuesday. The fall can be attributed to tariff pressures from Washington, which continue to impact India’s trade prospects and capital inflows. High demand for dollars and sustained foreign investor outflow have also kept the Indian currency under pressure.
On Monday, the rupee closed at an all-time low of 90.74 (provisional) against the US dollar, clocking a loss of 25 paise over its previous close. Exit of foreign portfolio investors is a factor that is prompting the fall of rupee.
Investors are worried
The persistent weakness of the rupee occurs against a backdrop of broader economic uncertainties and international trade issues. As policymakers and traders navigate these challenges, the currency’s performance remains closely watched by investors. Indian exports to the US are believed to be going strong, in spite of the tariffs, but uncertainties are working against the rupee.
By stabilising the rupee through interventions, the Reserve Bank of India aims to mitigate short-term fluctuations. The ongoing tariff discussions and economic indicators such as the CPI will likely continue to influence the rupee’s trajectory in the short to medium term.
Main reason for this fall of rupee is due to delay in signing a trade deal with the US. Though Indian side is claiming that the deal is almost finallised, it is yet to see a final version of the agreement. Every month’s delay is costing India in more ways – right from mounting trade deficit to rupee depreciation.
