The US Dollar Index, which compares the dollar's value to six other international currencies, has recently eclipsed its 20-year top and is currently trading at above 105. At the start of 1996. Three macroeconomic changes have caused an increase in the Dollar Index. Since a few days ago, the Indian rupee has been falling against the US dollar, reaching a record low of 79.03. Analysts are debating whether the native currency could continue to weaken in light of the dismal fundamentals as a result of this. In this article, we will discuss the reasons behind for growing dollar rate in India.
Growing Dollar Rate in India
The Indian rupee has been losing value over the past few days, and it set a record low against the US dollar of 79.03. Analysts are divided over whether the weak fundamentals could lead to further declines in the native currency as a result. Since January of this year, the rupee has decreased by roughly 6%. But on Thursday, it was able to bounce back from its all-time low, rising 13 paise to 78.90 against the dollar.
Now that the country is struggling with significant inflation and the cost of basic necessities is sharply rising, things are getting worse for the average person.
What are the Reasons for the Growing Dollar Rate in India?
The value of the Indian rupee in relation to the US dollar is determined by supply and demand. The value of the Indian rupee decreases when demand for US dollars increases and vice versa.
The demand for the dollar will be larger than the supply if a nation imports more than it exports, which will cause the indigenous currency, such as the rupee in India, to lose value in relation to the dollar.
The strong dollar outside, the high cost of crude oil, and capital outflows from abroad are currently the main factors contributing to the rupee's depreciation.
The rupee has been depreciating since the beginning of the year, notably after supply chain disruptions brought on by the Russia-Ukraine war, concerns with the global economy, inflation, and rising crude oil costs, among other issues.
The sale of shares by foreign institutional investors (FIIs) this year totalled $28.4 billion, exceeding the $11.8 billion sale of shares during the Global Financial Crisis of 2008. There have also been large outflows of foreign capital from domestic markets. The rupee has lost 5.9% of its value against the dollar so far this year.
The Indian rupee, which has recently been steadily losing value versus the dollar, crossed the 80/dollar mark for the first time ever. Experts worry that the rupee's decline will now be more severe. Since the dollar is the most significant currency in the world, any changes have a significant impact on international trade. EximPedia is the Best export import data website that also provides accurate Export import data, Custom and helps to grow your business globally.