Under Pressure
As the Indian rupee reached a record low of 87.58 to the dollar on Thursday, it finds itself at a critical juncture, navigating a sea of global and domestic pressures.
As the Indian rupee reached a record low of 87.58 to the dollar on Thursday, it finds itself at a critical juncture, navigating a sea of global and domestic pressures.
Notably, the rupee dropped to 85.0650 against the US dollar in early trade, compared to 84.9525 on Wednesday.
The Indian rupee’s surge to a two-month high on Thursday signals a broader shift in the global economic landscape, influenced not just by domestic factors but by international dynamics as well.
The minister said that a stable economy will propel India to become one of the top 3 economies in the world.
It is not just Western sanctions on Russia that accelerated the trend to circumvent the dollar, but the strength of the currency in the past year has also posed a challenge.
India will soon start settling trade with Russia in rupees as the State Bank of India has agreed to facilitate the process, the president of India's exporter group, Federation of Indian Export Organisations (FIEO), A Shaktivel told reporters on Wednesday.
RBI Governor Shaktikanta Das said that the Indian rupee has "held its own" and moved in an "orderly manner at a time of sharp depreciation in other currencies".
Tightening is required on both fronts. How many dollars are moving out/in on trade/current account must be monitored on a daily basis.
For the first time in a decade, the dollar reached its highest value in the first half of the year 2022, buoyed by various conflicts among countries and the Russia-Ukraine war.
Although depreciation of the currency makes imported goods expensive, and foreign travel and fees for studying abroad become costly, it is an erroneous presumption that absence of a strong currency is necessarily bad.
