The Rupee Declined By 161 Paise Against The Dollar
The rupee declined by 161 paise against the dollar this business week, Trouble due to weakness in the rupee.
The worsening of the rupee is acting like sprinkling salt on the wounds in the growing concern of Covid in front of the economy.
The rupee has steadily weakened against the dollar for the last five days. At one time in the currency market on Friday, the rupee had fallen to 74.97, the weakest level in the last eight months against the dollar.
However, it was at 74.73 at the time of market closing, which is 15 paise weaker than Thursday.
The rupee has lost 161 paise against the dollar this trading week. Experts are blaming the RBI’s announcement of providing adequate funds in the financial system and the purchase of bonds for this weakness of the rupee.
By the way, this weakness of the rupee is good for the exporting community, as they are paid in dollar terms.
The general public will have to bear the brunt of this depreciation of the rupee because they will not be able to get the benefit of cheap crude oil in the international market.
Oil companies pay in dollars to buy crude and due to the weakening of the rupee, they have to pay more for the dollar.
The rupee declined: The price of the rupee also plays an important role in deciding the retail price of petrol and diesel in the country.
The weak rupee will also increase the prices of edible oils in the country, as India imports 70 percent of its edible oil. Anyway, in the last six months, the retail prices of edible oils have gone up by 50 percent.
Separate reports of Nomura Research and SBI have been released on the rupee’s position and both of them have been cited as the biggest reason for RBI to buy bonds on behalf of RBI.
On April 7, 2021, reviewing the monetary policy, the RBI Governor announced the purchase of bonds worth one lakh crore rupees.
However, the aim is to provide sufficient funds to finance or spend with financial institutions and governments.
Both SBI and Nomura Research say that this is a downside to the rupee. There is a danger of rising inflation due to more funds in the market.
