K News desktop- The Indian rupee registered a major decline against the dollar on Friday and reached the lowest level in its history. Amidst the ongoing turmoil in the global financial markets, the price of one dollar reached Rs 92.39, which is considered to be the weakest level till date. Earlier in the last trading session also, the rupee had touched a low of 92.3575, but Friday’s fall left this record also behind.
The biggest reason behind this sharp fall in the rupee is considered to be the ongoing tension and war situation in the Middle East. Especially the conflict related to Iran has increased uncertainty in global markets. This tension has had a direct impact on the prices of crude oil, which have increased rapidly to close to $ 100 per barrel. Before the war, crude oil was stable around $70 a barrel, but the current situation has jolted energy markets.
India meets a large part of its energy needs from imported crude oil. In such a situation, the sudden rise in oil prices is proving to increase pressure on the country’s economy. When oil becomes expensive in the international market, India has to spend more dollars to buy it. This increases the demand for foreign currency and increases the pressure on the rupee, due to which its value starts falling.
Since the beginning of the conflict in the Middle East, the Indian currency has fallen by more than one percent. Expensive crude oil and weak rupee have a direct impact on the country’s economy. Due to increase in the cost of energy, expenditure in transportation, production and other sectors increases, the effect of which is also seen on inflation and economic activities. This is the reason why the current situation seems to be a big challenge for the Indian economy.
However, amidst this negative environment, one saving grace is that the position of the Indian rupee still remains relatively better compared to the currencies of many other emerging markets of the world. The active role of the Reserve Bank of India is being considered important behind this. The central bank has been intervening in the foreign exchange market from time to time to prevent the rupee’s fall from becoming too deep.
Experts believe that until the situation in the Middle East normalizes and crude oil prices soften, global markets may remain unstable. In such a situation, the direction of the rupee and energy markets in the coming days will largely depend on geopolitical developments.
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