On Monday, June 13, 2022, the first trading of the week, the rupee started with a big fall. Rupee ( Rupees vs Dollar ) fell below 78 per dollar for the first time. The rupee opened lower by 28 paise at 78.11 against the US dollar.
The fall increased during trading and the rupee made a record low of 78.16 per dollar. On Friday, the rupee had closed at 77.83 per dollar. Explain that the weakening of the rupee has an effect on the common man and the economy of the country. A weak rupee makes it expensive to import goods from abroad. However, for exporters, the weakness in the rupee gives an opportunity to earn extra.
The demand for dollars has increased due to rising prices and slow growth. Inflation in the US has reached a 40-year high and it is 8.6 percent on a yearly basis. This gave rise to the dollar index last week. The dollar index once again crossed the level of 104 while the US 10-year benchmark bond yields crossed the level of 3.15 percent. Japan’s yen and euro also fell to record lows against the dollar.
Foreign investors continue to sell
Foreign Institutional Investors (FIIs) continue to sell in the domestic market. FIIs were sellers in the domestic market for the eighth consecutive month. Since October 2021, foreign investors have withdrawn more than Rs 3.45 lakh crore from the market.
Advantage of weak rupee
The weakening of the rupee not only has disadvantages, but also has some advantages. Good money is also available for goods going from India to foreign countries. A weak rupee is beneficial for those exporting goods or services from the country. Products like parts, tea, coffee, rice, spices, marine products, meat are exported from India and the exporters of all these will benefit from the weakening of the rupee.
What will be the effect on common man
The weakening of the rupee means that now the country will have to spend more money to buy the same amount of goods. Imported goods will be more expensive. This includes gold, crude oil because the price of these commodities in the international market is fixed in dollars. At present, crude oil prices are rising and the rupee is at a record low, so importing petrol and diesel will be expensive.
At the same time, the margin of importing companies will also be affected because they will have to pay extra rupees to buy dollars. However, on the other hand, exporters will get benefit. Because if you pay in dollars, you will get more rupees. This will also increase inflation.
