Rupee Hits Fresh All-Time Low: The Indian Rupee has faltered badly in front of the strong dominance of the US Dollar. In the early trade on Friday itself, the rupee took a huge dive of 33 paise and fell to its new and historic low of 94.29. When the last trading session closed on Wednesday, the price of one dollar was Rs 93.96.
The biggest reason behind this sharp fall in the rupee is the ongoing war in West Asia. Ever since this tension started at the end of last month, a huge decline of about 3.5 percent has been recorded in our domestic currency. Fears of a prolonged war have created a major crisis in the global energy supply.
Due to this geopolitical instability, the prices of crude oil in the international market remain above the dangerous mark of $ 100 per barrel. Oil becoming expensive directly means that there will be tremendous economic pressure on economies like India, which are heavily dependent on energy imports. Due to this fear, there is slowdown in the stock markets around the world and bond yields are continuously increasing.
The shadow of inflation is looming over these things
Whenever the dollar strengthens, the fear of inflation deepens in India. Our country buys about 85 percent of its total crude oil requirement from abroad. It is paid in dollars. In such a situation, the weakness of the rupee directly means that now a higher price will have to be paid for the same oil. It is almost certain to have an impact on the prices of petrol and diesel as well as cooking gas (LPG). Apart from this, India imports large quantities of edible oils like palm oil and many types of pulses. Due to expensive imports, these essential things will also become expensive, due to which your kitchen budget can get completely shaken.
If you are planning to buy a new smartphone, TV or laptop, then now you may have to spend more time in your pocket. Important parts of all these gadgets are imported from abroad. The interesting thing is that mobiles, fridges or ACs manufactured within the country are also dependent on foreign components. If this fall of rupee continues, then there may be a rise of up to 10 percent in the prices of electronic products. Not only this, students who are studying abroad or those who are preparing to travel abroad will now have to spend more rupees than before to make payments in dollars.
What will be the impact on EMI?
The effect of this historical weakness of rupee is going to be visible on your bank passbook also. The Central Bank (RBI) can take strict steps to keep the inflation rate under control in the country. Under this, repo rates i.e. interest rates can be increased. As soon as this happens, EMI from your home loan to car loan will become expensive. Apart from this, foreign cars, heavy machinery and luxury items will also be direct victims of this decline and their prices will increase.
Investors are withdrawing their capital from the markets
Mainly both global and domestic reasons are hidden behind this entire development. Foreign institutional investors are continuously withdrawing their capital from Indian markets, due to which the back of the rupee is breaking. Along with this, the geopolitical tension spreading in the Middle East has completely turned the sentiment of global investors negative. Due to these reasons, there is huge pressure on the rupee. However, like every crisis, there is a hidden opportunity for a section of people in this too. Exporters like the country’s big IT and pharma companies directly benefit from this situation. Since they provide their services abroad, they get more rupees in return for their services when the dollar strengthens.