Rupee at its lowest level, understand why the rupee falling and what are its benefits and loss

Rupee Hits Its Lowest Level: The rupee came to an all -time low against the US dollar at 86.31 against the US dollar between the strong trend of the US currency and the rise in crude oil prices. This is the biggest decline in local currency in about two years. Indian currency has fallen by more than one rupee in the last two weeks from a closed level of 85.52 per dollar on December 30.

The rupee opened at 86.12 in the interbank foreign currency exchange market. It reached 86.31 at the lowest level of now against the dollar during trading. Rupia fell by 18 paise to close at 86.04 against the US dollar on Friday.

Meanwhile, the dollar index, which showed the US dollar position against six major currencies, gained 0.11 percent to 109.60.. The return on 10 -year bond of America rose to 4.78 percent of October, 2023 levels. International standard Brent crude gained 1.42 percent to $ 80.92 per barrel.

Why is the rupee falling?

There is a sharp decline in currency around the world including India. Why is the rupee falling? Why has it reached all time low? And what is the loss due to falling rupee? According to Vikas Sinha of NDTV Profit, this decline is of the stock market, this is an imported decline. Now why am I saying this, I explain it. We are falling the most due to the US. We are falling due to the things that the US has done.

There was hope in the US that the rate would be cut. The fed rate will cut the rate, but what is expected to cut the rate of Fed, then it was reduced, then the data of the unimplancy there was quite encouraging. Unemployment has decreased there. Now the impact of reduced unemployment is that the rate cut was expected, it is no longer expected to cut the rate cut. Now it seems that he can postpone a little, due to which now the markets are being imposed on all the markets besides India. Those who are foreign investors will withdraw money and they will shift money to the US market. Because he is safe for them. There they will get good returns there. If the rate cut is not there, then there was a decline due to it. Secondly, Jio Political is running, she is impacting. Thirdly, the price of crude is continuously increasing. Now if you see, then even the crude of eighty dollars has gone beyond. So these three factor are only due to weakness of rupee.

Effect on Air India too

According to the stock market data, foreign institutional investors (FIIs) were selling on Friday and purely sold shares worth Rs 2,254.68 crore. The fall in the rupee against the US dollar also puts pressure on the cost structure and profitability of airline Air India. A senior company official said that however, the airline has some natural rescue as it can charge more rent for international flights where tickets cost in foreign currency. The Indian rupee has been falling in recent weeks and reached a record low of 86.04 against the US dollar on 10 January. Due to the weak rupee, the operational expenditure of the airline companies increases, as most of their costs are in dollars.

What is the loss due to falling rupee?

Economist Mithali told that I feel that until the Indian Government comes from the announcement of some investment, which I think will come on the budget time and only two-three weeks are left for the budget, The sentiment of the market will be a bit good, but by then we will see the definationally that two weeks are going to be a little difficult for us.

Whenever the dollar is strong and our rupee is weak, it means that if you go to buy any item from the market of abroad, like crude we buy the most, when we go to buy crude, then first where we go to buy. According to the account, we had to pay less money, now we have to pay more money due to the weak rupee. So its direct effect falls on Trade Deficit.

This increases our trade deficit. When the trade deficit increases and when we buy these things expensive, then his impact is gradually on the common man’s pocket and it falls on all the things. If you are buying something expensive, then all the things that will be expensive will be expensive. All those things will be found expensive in the Economic Activity.

What is the benefit of falling money?

Mithali further said that whenever the dollar is strong and the rupee is weak, then you have to buy things more than before. So if we understand one thing that we pay for our oil price becomes more expensive for us, but when this exchange rate falls, we have to pay more money Those who are in the global market become more cheap.

So like if you are exporting a steel, you are exporting food items, they become more cheap in the entire global market, whoever is buying dollars from us, then we see this definationally that an impact more comes It is that our exports increase.

And if we look at the last one year data, then we have seen that our exports have increased six %, but the imports have fallen by two %, that is, net exports have increased by eight %.

So India is getting the benefit of being an exchanges rate. Meaning this exchange rate is causing a lot of benefit to us and our exports are increasing. So I feel that RBI does not need to do intervention in the monetary market right now.