Why Rupee is Falling Against Dollar

Why Rupee is Falling Against Dollar

A currency’s value rises when the demand for it rises and falls in value when the demand for it falls. Plus, the demand for the currency is determined by the demand of the country’s goods & services.

Now, let’s examine the reasons for the fall in the rupee’s value through the statements of advocates, founders etc.

 Ukraine Conflict

Astha Mago, Associate Director at Client Associates says, Although the rupee exceeded by 78, it is still in line with other currencies compared to the U.S. dollar. The U.S. and other safe havens are seeing an influx of capital. The ongoing conflict in Ukraine, the resulting supply interruptions, and the oil price have reduced growth prospects and raised the cost of financing. As a result, FIIs withdrew their funds, depreciating the rupee.

Interest Rates and Supply of the USD

According to Sonam Chandwani, managing partner of K.S. Legal and Associates.

“Higher interest rates and a limited supply of the USD are results of American monetary policies. This difference has a detrimental impact on the import of crude oil and the outflows of foreign funds. This has already affected the stock market, as seen by the significant declines in the Nifty and Sensex today. It will continue to impact the Indian economy in terms of gasoline costs. At this moment, India needs swift, strong fiscal policies to absorb this hit”.

More Imports than Exports

As per Anushka Arora, Principal & Founder, ABA Law Office, This time more investors have sold their foreign assets into the Indian rupee, significantly affecting the balance of imports and exports.

Inflated Oil Price

As per Vijay Bhambwani, Head of Research Behavioral Technical analysis at Equitymaster, high oil prices cause imported inflation, which affects FII inflows and business profitability, resulting in the decline of INR.

Rupee Dollar Exchange

“Global factors such as the Russia Ukraine war, soaring crude oil prices, and tightening international financial conditions are the major reasons for the weakening of the rupee against the dollar,” says Finance Minister Nirmala Sitharaman.

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Shreya Agarwal

I am from Bareilly. Currently I am doing MA in Journalism & mass communication from Amity, Jaipur