Rupee vs Dollar: The Indian Rupee has suffered a major blow in the currency market arena. The rupee could not stand the strength of the US dollar and collapsed on Tuesday. Due to the widespread strengthening of the dollar in foreign markets and withdrawal of money from the Indian market by foreign investors, the rupee has reached its all-time low. In early trade on Tuesday, the rupee fell by 32 paise to 89.85 per dollar. This historic fall of the rupee is a matter of concern not only for economists but also for the common man, because it has a direct impact on the country’s economy and inflation.
Rupee at record low level
There was a lot of activity in the interbank foreign exchange market since this morning. The rupee started trading at 89.70 against the US dollar. But as the day progressed, there was a tremendous increase in demand for dollars. Heavy buying of dollars by importers, big companies and foreign banks put deep pressure on the rupee.
As a result, the rupee fell by 32 paise compared to its previous closing price. The rupee had closed at 89.53 per dollar on Monday, which today fell to a record low of 89.85. Forex dealers say that shortage of dollars in the market and excess demand have weakened the rupee.
Foreign investors pulled out
The effect of this weakness of rupee was clearly visible on the domestic stock market also. Both Sensex and Nifty appeared under pressure. In early trade, BSE Sensex fell by 223.84 points or 0.26 percent to 85,418.06 points. At the same time, NSE Nifty was also seen slipping 59 points and trading at 26,116.75 points.
If we look at the stock market data, Foreign Institutional Investors (FIIs) are continuously selling in the Indian market. On Monday itself, foreign investors sold shares worth a net Rs 1,171.31 crore. When foreign investors withdraw their money and convert it into dollars, the pressure on the rupee increases further. Meanwhile, the ‘Dollar Index’, which measures the strength of the dollar against six major currencies, remains stable at 99.41. However, there is some relief on the crude oil front, where Brent crude is trading around $63.15 per barrel.
Rupee will strengthen due to RBI move
Market experts and experts believe that this huge fall in the rupee is mainly due to daily selling by foreign portfolio investors (FPIs). Apart from this, NDF expiry covering is also being considered as a reason for this. Experts say that due to lack of any major support from the Reserve Bank of India (RBI), speculators put pressure on the rupee.
According to Reuters report, the level of Rs 90 per dollar is like a psychological Lakshman Rekha. There is a possibility that RBI has intervened and sold dollars to stop the rupee from falling below the level of 90. If this decline continues, then imports may become expensive in the coming days, which may have a direct impact on the prices of petrol and diesel to mobile phones.
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