Mumbai3 days ago
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Due to the Iran war, the rupee crossed 95 against the US dollar for the first time today i.e. on March 30. It fell to the lowest level of 95.22 during trading.
However, it later recovered a bit and closed at 94.78 at the end of trading. This is a slight strengthening of 7 paise against the dollar as compared to the previous closing price of 94.85.
The weakness of the rupee will affect the common man also. Due to this, it will become expensive to buy goods imported from abroad like mobiles, gold-silver, crude oil. This will increase inflation.
Bhaskar from the eyes of cartoonists Chandrashekhar Hada and Mansoor Naqvi…
Understand the impact of rupee fall in 10 questions and answers…
Question 1: What is the biggest reason for this fall in the rupee?
answer: The biggest reason for this is the rise in crude oil prices. After Iran’s attacks on the energy bases of Gulf countries, the prices of Brent crude has crossed $ 115 per barrel. India imports 85% of its oil needs, for which payment has to be made in dollars. Due to oil becoming expensive, the demand for dollars increased and the rupee became weak.
Question 2: How much has the rupee fallen in this financial year?
answer: The rupee has fallen by about 4% in a month. The rupee has fallen by more than 10% in this financial year.
Question 3: What is the role of foreign investors (FIIs) in this?
answer: Foreign investors have withdrawn about Rs 1.15 lakh crore from the stock market so far in March. Due to fear of war and uncertainty, investors are investing in US bonds instead of emerging markets like India. This heavy selling has increased the pressure on the rupee.
Question 4: What does the ‘Strait of Hormuz’ tension have to do with the rupee?
answer: 20% of the world’s oil and half of India’s oil passes through this sea route. There is a possibility of supply stoppage due to war. According to experts, until the situation here becomes clear, the rupee will remain unstable.
Question 5: Is the Reserve Bank doing anything to stop this decline?
answer: Yes, RBI has reduced the overnight deposit limit for banks to 100 million dollars. The effect of this will be that banks will have to sell their extra dollars in the stock market. This will increase the supply of dollars and strengthen the rupee.
Question 6: Will this also affect the country’s GDP growth?
answer: Absolutely. Economists have warned that high energy prices could reduce India’s growth rate. Continuous increase in energy prices will increase inflation and harm India’s growth. It will also be difficult to cut interest rates.
Question 7: How will the weakening of the rupee affect the common man’s pocket?
answer: Due to weakening of rupee, imports will become expensive for India. More money will have to be paid for things like crude oil. Apart from this, electronic goods like mobiles, laptops imported from abroad will also be expensive. Studying abroad will become expensive.
Question 8: Does anyone benefit from the fall of the rupee?
answer: Yes, exporters benefit from weak rupee. Companies in the IT sector, pharma and textile industries get paid in dollars for their services or products. When they convert those dollars into rupees, they get more rupees than before.
Question 9. How might the rupee move in the coming days?
answer: Market experts believe that as long as crude oil prices remain above $110-115 and selling by foreign investors continues, the rupee will remain weak. If global sentiment does not improve, rupee may even touch 98 level.
Question 10: How is the price of currency determined?
answer: The price of any country’s currency is mainly decided on the basis of its ‘demand and supply’ in the international market. If India has to import more goods like crude oil from abroad, then more dollars will be required for payment. As the demand for dollar increases, it will become expensive and the rupee will fall.
Apart from this, the country’s inflation rate, interest rates and confidence of foreign investors also decide the value of the currency. If interest rates in India are good and the economy is stable, then foreign investors will bring dollars here, which will increase the supply of dollars and strengthen the rupee. In simple words, the more the currency is in demand and less availability in the world, the higher will be its price.
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Read this news also…
Banks will not be able to keep more than 100-million dollars with themselves: RBI’s instructions to stop the continuous fall in rupee, this will make foreign goods cheaper.
RBI has directed that banks will no longer be able to keep more than 100 million dollars (about Rs 950 crore) with themselves every day. Earlier, banks were holding 300 to 500 million dollars (Rs 2,845-4,743 crore) every day.
According to Forex analysts, the effect of the instruction will be that banks will now sell the extra dollars they have in the market, which will strengthen the rupee. Due to which buying foreign goods, studying and traveling abroad can become cheaper.
Apart from this, electronics products like mobile, laptop can also become cheaper. A day before RBI issued this instruction, the rupee has reached an all-time low of ₹ 94.59 against the dollar. Read the full news…
