Today, on April 30, as the market opened, the rupee once again fell below the 95 level against the US dollar. The rupee has now reached around 95.21 per dollar. Due to rising crude oil prices and huge demand for dollar, the rupee has reached its lowest level ever. On Thursday, the rupee opened at 95.02 per dollar—a decline of 0.2 per cent compared to its previous closing price of 94.84 against the US dollar. Subsequently, it fell further against the dollar to a new record low of 95.27—well below the previous record low of 95.22 per dollar set in March.
Why did the rupee become so weak against the dollar?
The main reason for the weakening of the currency today is the huge rise in oil prices. Brent crude futures are trading above $122 a barrel—its highest level in more than three years. At the same time, the US benchmark, West Texas Intermediate (WTI) is also trading at higher levels, which is around the level of $110 per barrel. Since India imports a large part of its oil needs, rising oil prices mean an increased need for dollars. As a result, oil companies are buying large amounts of dollars; This increased demand for dollars strengthens the American currency, while at the same time weakening the rupee.
Selling pressure from foreign investors is also another big reason. In the midst of tensions between the US and Iran, global investors are pulling their capital out of riskier markets like India and moving it into the US dollar, which is considered a safe-haven asset. This trend is further increasing the strength of the dollar.
Limited scope for intervention by the Reserve Bank of India (RBI) is also a major factor behind this decline. Although the RBI has been intervening in foreign exchange reserves to stabilize the rupee, its efforts are proving ineffective in the face of global factors—such as rising oil prices and a strengthening dollar.
impact on india
A stronger dollar will make everything—from studying abroad to international travel—more expensive, because people will have to spend much more money than before. Other imported electronic goods like smartphones and laptops will also become costlier.
If the rupee weakens, the costs of oil companies will increase further. As a result, there are indications that fuel prices may also increase in the domestic market.
