Today is proving to be a very difficult day for the Indian currency. On Monday morning, the rupee fell 69 paise to hit a historic low of ₹95.17 against the US dollar. This is the first time the rupee has crossed the psychological barrier of 95.
Why is the rupee falling?
Increase in crude oil prices: After the failure of peace talks between America and Iran, the prices of crude oil (Brent crude) in the international market have increased by 4.17% to $ 105.5 per barrel. As a result, India now has to spend more dollars to buy oil.
Trump’s tough stance: US President Donald Trump has rejected Iran’s peace proposal, and called it unacceptable. This has increased the fear of possible conflict, making investors nervous.
Strengthening of Dollar: Amidst global uncertainty, investors around the world are considering the dollar as a safe haven asset, due to which the dollar index has reached the level of 98.12.
Stock market turmoil: Foreign portfolio investors (FPIs) are pulling out their money from the Indian stock market. This morning, the Sensex fell 1,000 points and the Nifty fell nearly 300 points – putting direct downward pressure on the rupee.
Market experts’ opinion
According to experts, ongoing geopolitical tensions and President Trump’s recent statements have pushed up oil prices and pushed down the prices of risk assets (such as equities). Although the Reserve Bank of India (RBI) tried to stabilize the rupee last Friday, the current global pressure is proving too much.
How will this affect you?
If you are planning to travel abroad, you will now have to spend more rupees to buy dollars. The combination of rising crude oil prices and a weak rupee could push up prices of petrol and diesel as well as other imported goods (such as electronics and edible oils). Experts warn that this volatility in the currency market is likely to continue until global tensions subside.
