Business News : Tuesday saw a big jolt for the Indian currency. The rupee tumbled to 96 against the dollar, its weakest level in two months. The rupee fell around 0.2 percent to 96.1450 per dollar during today’s trading session. This decline is no small matter. The rapidly changing conditions in the international market are responsible for this. Investors around the world are currently under a lot of pressure. India is a net energy importing country, that is, we import a significant portion of our requirements from abroad. So, when the rupee weakens against the dollar, we have to pay higher prices for imports.

Crude oil spoils the whole game

Crude oil is the biggest villain behind the rupee’s plight. Globally, Brent crude oil prices rose more than 1.5 percent. Following this surge, crude oil prices have crossed $107 per barrel. In fact, the situation in the Middle East continues to deteriorate. The ongoing conflict between the US and Iran has become a headache for the global economy. The market is concerned that these tensions could disrupt energy supplies. Although there have been signs that crude oil exports from the Middle East are returning to normal, the tense situation has dashed all these hopes.

The flight of investors from the stock market

The impact of these global tensions is not limited to the currency market. It has had a profound impact on everything from the Indian stock market to the bond market. Foreign investors are panicking. They are rapidly withdrawing their funds from the Indian markets. If we look at the September figures alone, foreign investors have withdrawn a whopping $3.7 billion. This massive exit of the dollar from the market has put considerable pressure on the rupee. When the dollar inflow increases, the rupee automatically weakens.

Dark clouds are hanging over the economy

Rising oil prices will directly increase the country’s import bill. This will result in inflation, as everything from transportation to manufacturing will become more expensive. Additionally, selling by foreign investors in the stock market has completely eroded the value. The rise of the rupee above 96 is a clear indication that global market pressure is now bearing down on India. If the situation between the US and Iran does not improve in the coming days, this crude oil crisis may hurt the rupee further.