The RBI’s current target is to maintain inflation in the 4-6% range. The idea is to eventually balance demand and supply of commodities, which should bring prices back in control. This reduces the liquidity in the market, and people start reallocating their money towards more essential items. The subsequent rise in inflation has forced central banks around the world to raise interest rates, thereby making it more expensive to borrow. The US dollar is the world’s reserve currency – it means that the rest of the world uses US dollars which only one country prints. This is the first time the rupee has crossed the 78-mark valuation as compared to the American bill, falling by 5 since the start of the year. The rupee, which has been battered by a persistent surge in foreign fund outflow, a strong dollar, and widening deficits due to a record oil price spike, is facing further headwinds in.
The end result is that it –Įxported inflation to the rest of the world. The Indian Rupee hits a record low with the currency valued at 78.2825 against the US Dollar as it slips another 0.6 after a trail of falls over the last few months. The Indian rupee could further plummet to as low as Rs81 per dollar, or 22 against dirham, in the next five to six months, currency experts and analysts warned. It all started when the US Fed went in for quantitative easing – and printed trillions of dollars to keep its economy from crashing. It remains to be seen how well India’s central bank manages this, or if it is able to turnaround the Indian economy’s fortunes. Overall, between Nomura, Standard Chartered and Bloomberg Economics, the rupee could fall to as low as ₹81 come November. “We have been a little more bearish than consensus because we think the underlying balance of payments dynamics have deteriorated quite significantly,” said Divya Devesh, head of ASEAN and South Asia forex research at Standard Chartered, Singapore. Said Rohan Arora, emerging markets Asia strategist at UBS.Īs per analysts, the underlying fundamentals of the Indian economy have deteriorated, which should be a bigger cause for concern for the government as well as us. Also, view Rupee to Dollar currency charts. Compare money transfer services, compare exchange rates and commissions for sending money from India to United States. It’s a very modest adjustment of a currency with deteriorating fundamentals,” Convert Indian Rupees to American Dollars with a conversion calculator, or Rupees to Dollars conversion tables. Nor do I think ₹80 is a runaway depreciation by any metric. “A grind higher for USD/INR from here toward 80 in the next couple of months is not a big ask. On Monday, the Indian rupee slipped to a fresh record low of 78.04 per US dollar amidst a resurgence in strength in the dollar primarily on account of expectations of aggressive policy tightening. For the average Indian, this could mean that a respite from inflation might take a lot longer than they would have hoped for. While India’s central bank maintained that it won’t let a runaway decline in rupee take place, analysts predict that a fall to 81 a dollar is on the cards. Stronger dollar and sustained up move in global crude oil price is weighing on the overall market sentiment," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, PTI reported.A rise in crude oil prices due to the Russia-Ukraine war spells more trouble for the rupee and the Indian economy. Last week's central bank policy action led to heightened volatility in most of the currencies. "Rupee fell to fresh all time lows on Monday as the dollar rose broadly against its major crosses. Joseph said Indian Rupee spot plunged to record lows, tracking weakness in Asian peers amid a stronger dollar index and surging treasury yields in the US. Royce Vargheese Joseph - Research Analyst - Currency and Energy, Anand Rathi Shares and Stock Brokers, cited the stronger position of the dollar, sharp sell off in equity markets and elevated crude prices and rising domestic inflation as reasons behind the decline of the Indian Rupee, according to a PTI report. On Friday, the rupee had slumped 55 paise to close at 76.90.įorex traders and market trackers said risk appetite has weakened amid rising bond yields in the US and mounting concerns about inflation that may trigger more aggressive rate hikes by global central banks.