Historic fall in rupee, new low of 85.97 against dollar
New Delhi: There has been a huge decline in the Indian rupee due to the strengthening of the dollar ahead of the US labor market data. The rupee has touched a new all-time low of 85.97 against the dollar, raising fears of imports becoming costlier and inflation rising.Pressure on the rupee was seen in the foreign exchange market from the beginning of trading today. The rupee opened at 85.80 against the dollar and soon fell to 85.97, its all-time low. According to experts, the dollar has strengthened due to the possibility of further increase in interest rates by the US Federal Reserve and the tendency to avoid risk at the global level, which has had a direct impact on the rupee.According to Research Analyst at Mirae Asset Sharekhan Anuj Choudhary “Weak tone in the domestic markets, a strong greenback and persistent FII outflows may continue to put downside pressure on the Rupee. Additionally, the rising crude oil prices, as well as surge in the US treasury yields may further weigh on the domestic unit. However, any RBI intervention may support Rupee at lower levels. Traders may take cues from the non-farm payrolls report and consumer sentiment data from the US.” The market is eagerly waiting for the employment data to be released by the US Labor Department. These data will give an idea of the health of the US economy and may have an impact on the monetary policy of the Federal Reserve. It is believed that if employment figures remain strong, the Federal Reserve may increase interest rates further, which will further strengthen the dollar and increase pressure on the rupee.The impact of this fall in rupee will also be seen on the Indian economy. Due to costlier imports, the prices of other commodities including petrol and diesel may increase, which will increase the burden on the common man’s pocket. Apart from this, more money will have to be spent in repaying foreign loans. Some experts believe that this fall in the rupee is temporary and an improvement may be seen soon. But, at present, given the strength of the dollar and global economic conditions, the rupee is likely to remain under pressure.
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