Rupee vs Dollar: Rupee Strengthens Against Dollar
Rupee vs Dollar: Rupee strengthens against Dollar, Euro falls; Know what will be its effect.
The rupee climbed 9 paise to 79.24 against the US dollar in early trade on Wednesday, recovering from its record low.
The rupee opened at 79.29 against the US dollar at the Interbank Foreign Exchange. The rupee level was seen in the range of 79.24 to 79.34 against the US dollar in early trade.
The rupee had closed at an all-time low of 79.33 against the US dollar in the previous session.
On the one hand, there is a fluctuation in the value of the rupee, while now the condition of the euro, the currency of European countries, is also suffering.
The rupee had slipped to its record low on Tuesday. At the same time, the euro has come down to a 20-year low of $ 1.029 against the US dollar. This is being seen as a threat of recession in the Eurozone.
Rupee vs Dollar: Rupee sinks due to rising trade deficit.
The rising import data in the month of June has made the domestic money market more relaxed. On Tuesday, the rupee weakened by 41 paise to close at 79.36 against the dollar.
Given the uncertainty in the global market as well as the speed with which foreign institutional investors are withdrawing their investments from the market, the rupee’s price is still being speculated to remain weak.
Market experts are now beginning to believe that it will not take much time for the rupee to cross the 80 levels.
At the level of the Reserve Bank of India also, there is not much effort to stop the rupee. The weakness of 41 paise in a single trading day would be called a major decline in recent days.
For this, most experts are blaming the business data released by the central government a day ago. In the month of June, India exported $ 38 billion while imported $ 63.6 billion.
That is, exports (business deficit) have been 26.6 billion dollars as compared to imports.
With this, the current account deficit (the difference between forex outgoing and outgoing foreign exchange in the country) is expected to be close to $ 30 billion in the first quarter, which is only $ 13 billion in the same quarter of last fiscal.
The deficit in the current account has a direct effect on the inflation of the country. Hence, it has had an impact on the value of the Rupee.
Kotak Mahindra’s report says that due to the rapid increase in interest rates in the US, it seems that the pressure on the Indian rupee will continue toward other global currencies.
There will also be an increase in the trade deficit, the possibility of a rise in crude oil prices, and the possibility of a fall in the global economy.
Rupee will remain between 78.5 to 80 for now. The government’s effort to rein in gold imports in the past has also not had any effect.
Rupee vs Dollar: What will be the effect?
However, this weakness of the rupee will affect the prices of everything that we import in large quantities from outside. For example, petroleum products.
The balance between the rupee and the dollar plays an important role in deciding the retail price in the domestic market.
If crude is getting cheaper and the rupee continues to fall, then the general public does not get the benefit of cheap crude. Because oil companies have to spend more money on importing crude.
The threat of recession to the eurozone.
According to the EU Statistical Office, annual inflation in the euro area rose to 8.6 percent in June, up from 8.1 percent in May. This has put the eurozone at risk of recession.
Significantly, compared to the US counterpart, the ECB is less aggressive in tightening its monetary policies. This has increased the risk of further weakening of the euro.
