On Thursday, recovery was seen in the Indian rupee against the dollar. The rupee has improved from its all-time low to 91.58 per dollar. Earlier on Wednesday it had reached a record low of 92.31. Due to the ongoing tension in the Middle East and rising crude oil prices, there is constant pressure on the rupee, which has forced the central bank to intervene to manage it.
Main reasons for decline and improvement in rupee
A huge fall in the rupee was seen on Wednesday, mainly due to instability in the global market. The Strait of Hormuz has been closed after the news of attacks on Iran by America and Israel. Because of this, crude oil prices crossed $82 per barrel. Foreign investors (FIIs) also withdrew about Rs 3,200 crore from the market, increasing pressure on the rupee. This decline was felt more when the market opened after the Holi holiday.
How did RBI stop the fall of rupee?
According to market experts, the Reserve Bank of India (RBI) started selling dollars to prevent the rupee from falling further. Public sector banks also sold dollars to prevent the rupee from falling below the 92.50 level. Forex advisor Amit Pabari says that unless external tensions subside, the rupee may remain weak. Sudarshan Nambiar of Yes Bank also admitted that dollar sales by public sector banks have arrested the major decline.
Today’s key figures:
Today’s Rate (Thursday)
91.58/USD
record low
92.31/USD
previous closing price
92.15/USD
price of crude oil
$82+ per barrel
Its impact on common people and migrants
India buys 85% of its oil needs from outside, so petrol and diesel may become costlier due to weak rupee. This will have a direct impact on the inflation of food items. Former RBI Governor Raghuram Rajan has also expressed concern over rising inflation. At the same time, Indians working in Gulf countries who send money home may get some benefit in the exchange rate from the weak rupee, but there is also a risk of rising inflation in India.