The Indian rupee hit its all-time low against the US dollar amid rising tensions in West Asia and a sharp rise in crude oil prices. The rupee closed at 94.82 per dollar in the interbank foreign exchange market on Friday, a new record low.
The rupee opened at 94.18 per dollar on Friday. However, it continued to decline due to continued weak flows throughout the day and finally closed at an all-time low of 94.82. Earlier, the rupee had fallen to an all-time low of 93.96.
Experts say the ongoing conflict in West Asia, rising crude oil prices and selling by foreign investors are putting pressure on the rupee.
Geopolitical tensions and the Iran-related conflict have fueled uncertainty in global markets. Investors are turning to safe-haven assets like the dollar to avoid risk, putting additional pressure on the rupee.
The rise in crude oil prices has also weighed on the rupee. The price of Brent crude has reached around 110 dollars per barrel. Since India meets a large part of its energy needs through imports, rising oil prices increase demand for the dollar and weaken the rupee.
Foreign institutional investors have withdrawn large amounts of funds from the Indian market, increasing demand for the dollar and putting additional pressure on the rupee. Billions of dollars in sales have been reported in recent weeks.
Emerging market currencies have been under pressure as the US dollar index strengthened. Many Asian currencies, including the rupee, have been affected by this global trend.
The impact of the fall of the rupee was also seen on the Indian stock market. The BSE Sensex closed down around 1,690 points (2.2%) at 73,583, while the Nifty 50 also recorded a decline of around 487 points.
Investors lost around ₹8.5 lakh crore due to this decline, indicating increased volatility in the market.
The rupee’s weakness has a direct impact on the common man. Imported goods, especially petrol and diesel, are likely to become expensive. Costs for students studying abroad may increase. Also, increasing strain on import bills and subsidies may increase government fiscal pressure.
A weaker rupee may benefit exporters, as they receive payments in dollars. This could benefit the IT, pharmaceutical and textile sectors.
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