Fall in rupee
The impact of global tension and American tariffs is weakening the Indian rupee. The rupee has reached all-time low against the US dollar. The rupee reached 88.33 on Monday, which is more than Rs 88.30 on last Friday. The fall of the rupee can deliver a lot of dent to the country’s economy in the coming time. Let us understand what can lead to 5 big losses to the country.
US President Donald Trump has imposed 50 percent tariff on India ever since. Since then, the move of Indian currency has changed. Just say that if the bad days of the rupee have come, there will be no exaggeration in it. Statistics are telling that Indian currency is going through its worst time. The main reason behind its fall is tariff, apart from this, the frequent hedging demand from the importers and the sale of FPI from both debt and equity has increased the pressure.
Expert says that the upcoming decision of GST Council can provide some relief. At the same time, the head and commodity research of Kotak Securities, Anidya Banerjee said that if the spot interest rate reaches close to 88.50, then the intervention of RBI is expected. If the American tariff is not withdrawn, the problem may increase, the country may have to face strong loss.
Loss of weakening of rupee
If the currency of any country is weak, then it becomes expensive to trade it. In the international market, the prices of things may be reduced, but it is not considered good news for that country. Something like this is also with India at the moment. If the rupee falls, the market may get strong dent.
- Dearness- India imports major items like crude oil, so the weak rupee makes these imports more expensive, which increases fuel prices and increases the cost of transport and other items. The weakening of the rupee will directly affect inflation. This deepens the risk of high inflation.
- High import cost-Due to the weakening of the rupee, businesses and customers have to pay an increased price for imported things like electronics, machinery and raw materials. This can reduce the profits of companies and reduce the strength of customers to buy.
- Trade deficit enhancement- Weak rupee makes imports more expensive and if the demand for import remains more, then the trade deficit of the country may increase. Due to this, there is a risk of increasing more pressure on the rupee.
- Foreign investment The falling rupee often indicates that foreign investors are withdrawing money from Indian shares and bond markets. This increases the pressure on both the rupee and the market.
- Increased corporate loan- If the rupee is weak, then Indian companies who have taken loans in foreign currency have to pay more money to repay. This affects both their financial status and profits, and the value of the stock can also fall.