Indian currency is weakening day by day. It recently fell to a lifetime low in today’s forex trading on Thursday. The US Federal Bank recorded a huge fall in the wake of raising interest rates. The stock market gyrations have intensified the pressure on the rupee. The exchange rate touched a low of Rs 80.91 against the dollar, losing Rs 1.24 per cent at one stage of trading. Finally it settled at Rs.80.86 with a loss of 90 paise. This was a record low close for the rupee against the dollar. Dollar strengthening due to US interest rate hike, weakness in equity markets and stagnant oil prices are putting the rupee under pressure. Generally, if interest rates rise in the US, investors withdraw their investments from domestic equity markets. They are moved to America for higher income. As a result demand for dollar increases. As a result, the pressure on the rupee will increase and lead to weakening.
Depreciation of rupee will further burden the common man. Prices of essentials will increase. Inflation increases. One has to pay a higher amount for goods and services. High prices have to be paid for cooking oil and pulses imported from abroad. If the rupee depreciates, more will be paid for dollars. Industries that import a large portion of raw materials will be hit by currency depreciation. Abroad is expensive, from higher education to tourism.
In particular, we are importing crude oil, gold, cooking oil and pulses from abroad. Economists are worried that the rising dollar will push prices higher. It is warned that the prices of raw materials used in various industrial products will increase. Experts say that these developments will bring benefits to our IT and pharma sector companies.