New Delhi: Despite all the efforts of the Reserve Bank, the weakness of the rupee against the US dollar is not taking its name to stop. On Thursday, the Indian currency went up to Rs 79.74 against the dollar in the Forex market, which is a record low so far.
In fact, inflation in the US is at a 41-year high of 9.1 percent and the demand for dollars is increasing amid the ongoing volatility in the global market. The main reason for this is the ongoing war between Russia and Ukraine, which has imposed many sanctions on Russia and the demand for dollars for trading is increasing continuously, which has pushed the dollar to its strongest position in 20 years. Its direct effect is also visible on the rupee.
How the weak rupee is affecting investors
The supply of gas from Russia to European countries has stopped and there is a deepening of the fear of recession. This is the reason why investors in the global market are currently buying dollars instead of euros and other currencies. Due to this the demand for the US dollar is increasing and it is continuously strengthening. Indian investors are also advised to invest in dollar-centric options for the time being, as the Indian currency does not see any room for improvement.
Where and who will be affected
- First of all, due to falling rupee, imports will become expensive, because Indian importers will now have to spend more rupees against the dollar.
- India imports 85 per cent of its total consumption of crude oil, which will make the dollar costlier and put pressure on it.
- If fuel becomes expensive, the cost of freight will increase, due to which the prices of everyday items will increase and the burden of inflation on the common man will also increase.
- It will also affect those studying abroad and their expenditure will increase, because now they will have to spend more rupees against the dollar.
- The current account deficit will widen, which has already reached $40 billion. In the same period last year, it was a surplus of $ 55 billion.
The burden on Indian companies will increase
Indian companies have raised large amounts of debt from foreign markets. According to an estimate, the Indian corporate world had a foreign debt of about $ 226.4 billion as of December 2021. If the rupee continues to fall like this against the dollar, then companies will find it very difficult to pay the interest of this loan, because their interest repayment amount will increase due to the weakness of the rupee. However, those sending rupees to India from foreign markets will benefit from the weak Indian currency and they will get a higher price in the country.
