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Indian Rupee hits fresh record low at 83.08 against dollar

New Delhi: The Indian rupee on Thursday recorded its fall at 83.08 against the dollar following declines in the market for emerging currencies. The Indian rupee is seeing continuous down against the dollar for the last few days. There is need to arrest the continuous fall. Rupee Hits a fresh record low, at 83.08 against […]

dollar vs rupee

New Delhi: The Indian rupee on Thursday recorded its fall at 83.08 against the dollar following declines in the market for emerging currencies. The Indian rupee is seeing continuous down against the dollar for the last few days. There is need to arrest the continuous fall.

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On Wednesday Indian Rupee fell below 83 against the dollar and closed at a new low, following global cues.

On Wednesday the rupee started out at 82.33 to the dollar but fell as low as 83.01 during the course of the day. It lost 0.76 percent from its previous close of 82.36 to conclude the day at 82.99.

Also Read: Indian share market witnesses fall after 4-day gains

Dollar rises

Other currencies continue to suffer losses as the value of the dollar rises. The Japanese yen plunged as low as 149.48, its lowest level since 1990 and getting closer to the crucial 150 barrier, while the British pound dropped 0.6 percent to 1.1247. The dollar index increased by 0.3%.

Domestic inflation

Domestically, inflation is also anticipated to increase as a result of the winter crop’s minimum support prices increasing at a quicker rate than in the previous year, especially wheat’s 5.5% increase.

“Besides domestic inflation worries, global uncertainties and spillover risks remain high, with the US Fed determined to tighten policy progressively till inflation makes a decisive turn, leaving the door open for more pain for emerging markets’ assets,” said Radhika Rao economist at DBS Bank.

Price stability

The need for price stability, to ground inflationary expectations, and to backstop rate differentials to maintain the currency are driving DBS Bank’s projections for 60 bps further increases this fiscal year. The policy committee is anticipated to take a break in FY24, she stated.

The Reserve Bank of India’s monetary policy committee recently received requests for slower rate increases and a stop at 6 percent from two foreign members.

Prof Jayant Varma advocated a pause at 6 percent amid concerns about fragile growth. “It is dangerous to push the policy well above the neutral rate in an environment where the growth outlook is very fragile,” Varma said.

Effect on Indian economy?

The value of rupee is determined by its demand and supply against the dollar. The fall of the rupee has an impact on the country’s imports and exports. With this he pays for the goods imported into the country. The weakening of the rupee will make imports expensive in the country. Due to this, goods coming from abroad like crude oil, mobiles, consumer durables etc. become expensive. If the rupee weakens, it will become costly to study, get treatment and travel abroad.

Also Read: Domestic passenger count rises by 65% in Sept, DGCA data says

Experts’ views

According to Ashima Goyal, high Indian repo rates resulted in significant costs in 2011, 2014, and 2018, and she said that it is essential to proceed with extreme caution now that forward-looking real interest rates are positive.

German bonds increased in yield by 7 basis points over the 10-year period, US Treasury yields by 5 basis points, and Indian bonds increased in yield by 3 basis points.

The deterioration followed a larger-than-anticipated spike in UK inflation, which sparked worries that ongoing price hikes might prolong the nation’s slump.

Prior to this, UK CPI increased by 10.1% in September from 9.9% in August, matching a 40-year peak hit in July.

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Written By

Divya Richa

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