The rupee closed at 83.14 against the dollar, inflation may increase due to the weakness of the rupee!

Rupee Dollar: The rupee continues to depreciate against the dollar. In the currency market, the rupee fell below Rs 83 to Rs 83.16 per dollar. The Reserve Bank of India has also intervened to stop the fall of the rupee. The RBI has sold dollars through state-owned banks to stem the fall in the rupee.

Despite dollar selling by the RBI, the rupee remained below 83 to the dollar and closed at Rs 83.14. In October last year, the rupee hit a record low of 83.29 against the dollar for the first time. Continued selling by foreign investors in the Indian stock market has weakened the rupee against the dollar. A weakening rupee against the dollar does not bode well for India. Importing to India can be expensive. Including crude oil, edible oil, electronics items that India imports the most may have to pay higher prices. Depreciation of the rupee against the dollar may reduce domestic foreign exchange reserves, then increase trade deficit, current account deficit.

Decrease in foreign exchange reserves

Foreign exchange reserves once again exceeded 600 billion dollars. Although this is down from the peak of $645 billion in October 2021. In 2022, the RBI had to repeatedly sell dollars to stem the rupee’s decline, leading to a decline in foreign exchange reserves. And today again there is news that RBI has sold dollars. Foreign exchange reserves may decrease if RBI intervenes to peg the rupee.

Import of crude oil will become expensive.

India imports 80% of its crude oil consumption. Indian oil companies will have to pay more for imports due to the rise in crude oil prices as well as the weakness of the rupee and the strength of the dollar. In fact, for importing crude oil, oil companies have to pay only in dollars.

Buying gold will be expensive!

India is one of the major importers of gold. The festive season is coming. From Navratri to Ganesh Chaturthi, Dhanteras and Diwali, people buy gold. If gold becomes expensive to import due to dollar strength, gold prices in the country may rise. In such a case, the pocket may have to be loosened more on the purchase of gold during the festive season.

Electronic gadgets will be expensive!

India is among the major importers of electronics products. If the dollar strengthens against the rupee, the import of electronics items may become more expensive, which may lead to an increase in prices of these items.

Cars can be expensive!

Many automobile companies depend on importing auto parts. If the rupee weakens against the dollar, you may have to pay more to import these parts. If a weak rupee and a strong dollar increase the cost of car manufacturers, they may increase the prices of cars.

Studying abroad is expensive.

A fall in the rupee against the US dollar could add to the worries of Indian parents. Parents whose children are studying abroad will have to spend more money on their children’s education due to the strengthening of the dollar against the rupee, especially parents whose children are studying in the US. Sending dollars to them will cost more rupees.

Also read this

Import of wheat: The rise in wheat prices in an election year made the government sleepy, considering imports from Russia

Leave a Comment