Why is the rupee falling against the dollar, will it affect you too? Know its advantages and disadvantages

New Delhi: The rupee is continuously declining against the US dollar. On Friday, January 10, the rupee fell by 18 paise and closed at 86.04 per dollar for the first time. Earlier on Thursday, the rupee had closed at 85.86 against the US dollar. Amidst the continuous decline in the Indian currency, many questions have started arising in the minds of people. The biggest thing is that what effect will the reduction in valuation of rupee against the US dollar have on the general public. Let us try to understand this.

First of all we have to understand why the value of rupee falls against the US dollar. The answer is that there are many reasons for the decline in the value of rupee against the dollar. Such as-

• Foreign investors withdrawing their capital from India. This increases pressure on the country's currency rupee.
• According to foreign exchange traders, rising crude oil prices abroad and negative sentiment in the domestic stock market have also put pressure on the Indian currency.
• America's newly elected President Donald Trump will take oath on January 20. After this he can make many changes related to business. This has increased the demand for dollars due to which the rupee has weakened.
• At present India is importing crude oil and gold from other countries. This increases the demand for dollars and weakens the rupee.
• India's exports are still very low. When there is more export, the rupee will appreciate. The rupee is also weakening due to lack of much exports.

RBI trying to stabilize the rupee

To stabilize the value of rupee, the Reserve Bank of India (RBI) has increased the use of foreign exchange reserves. To keep the demand for rupee stable, RBI has increased the supply of dollars. This is the reason why at present there is a decrease in the country's foreign exchange reserves. A deficit of $ 5.7 billion has been recorded in foreign exchange reserves during the week ending January 3, 2025.

Now coming to the main question, what is the impact of falling rupee. The answer to this is that the fall of the rupee affects not only the government but also the general public. Due to falling rupee, imports become expensive while exports become cheaper. It can be understood in simple language that the government has to spend more money to buy goods from abroad. For example, be it oil or gold, the government has to pay more money to purchase these things.

affects the general public

It is noteworthy that India imports more than 80 percent of its crude oil. In the financial year 2023-24, India imported 87.7 percent crude oil. Whereas in the previous year it was 87.4 percent. When the rupee weakens, the import bill for crude oil increases. This may increase the prices of petrol and diesel. If prices increase, it affects the general public in the form of inflation.

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Who benefits from the fall in rupee?

America and those countries that export goods to India benefit the most from the strengthening of the US dollar and falling rupee. Since most of the countries of the world do business in US dollars. In such a situation, US dollars become less and less from India. At the same time, Indians also benefit from working in America. When they come to India they have to convert dollars into rupees. Due to this, Indian currency is available in higher value than before.