Dollar Vs Rupee: Today, before the MPC meeting of the Reserve Bank of India (RBI), the Indian Rupee has gone into the abyss. On Wednesday, December 3, the rupee crossed the level of 90 against the US dollar, which is its lowest level till date.
In early trade, the rupee opened at 89.96 against the dollar and soon fell to 90.1325. In the last session it had closed at 89.87. This fall in the rupee has come after the currency reached a record low on Tuesday. Currency experts believe that the rupee is weakening due to continuous selling by foreign investors and failure to reach a trade deal between India and America.
Why is the rupee falling?
This year, the rupee has declined by about 5 percent against the dollar and with this it has become the worst performing currency in Asia. There is pressure on the rupee due to record high trade deficit and continuous withdrawal of foreign investors from India. Apart from this, talks regarding trade deal between America and India are also stuck.
Due to all this, the rupee is falling despite the weakening of the dollar index. The increase in imports – especially of gold and silver – along with the decline in exports due to tariffs has widened the merchandise trade gap to $41.68 billion, increasing demand for the dollar. Here, due to increase in demand for dollars, there is pressure on the rupee and it falls.
Will the rupee fall further?
Experts believe that the rupee may remain under pressure for some time to come because the trade deficit is increasing, there is uncertainty regarding the US-India trade agreement, portfolio flow is weak – all this has put the dollar in demand.
RBI has been continuously intervening to reduce the fall in the rupee, but continued outflows and strong dollar strength around the world may push the currency lower over time. Now only RBI’s strategy of intervention and improvement in foreign investment will decide how much further the rupee will weaken from the current level.
Also read:
Bhujia Chips gave 33000% return in 4 years, beat Nvidia by making Rs 40 crore from Rs 12 lakh.
