Rupee Hits All-Time Low, Slips Past ₹93 Against US Dollar

The Indian rupee has plunged to a historic low, breaching the ₹93 mark against the US dollar for the first time. The sharp depreciation reflects mounting global and domestic economic pressures, raising concerns about inflation and financial stability.

Why is the Rupee Falling?

1. Surge in Crude Oil Prices

One of the primary reasons behind the rupee's decline is the sharp rise in global crude oil prices. India imports over 80% of its oil requirements, and higher oil prices increase demand for dollars, putting pressure on the domestic currency.

2. Global Geopolitical Tensions

Ongoing geopolitical conflicts, particularly in the Middle East, have disrupted energy markets and increased uncertainty. Investors are shifting towards safer assets like the US dollar, weakening emerging market currencies including the rupee.

3. Foreign Capital Outflows

Foreign institutional investors have been pulling money out of Indian equity markets. This capital flight leads to increased demand for dollars, further weakening the rupee.

4. Strength of the US Dollar

The US dollar has been gaining strength globally due to relatively strong economic performance and interest rate expectations in the United States. A stronger dollar automatically puts pressure on other currencies.

5. Declining Forex Reserves

India’s foreign exchange reserves have seen a dip, limiting the Reserve Bank of India's ability to intervene aggressively in the currency market.

Impact on the Indian Economy

Rising Inflation

A weaker rupee makes imports more expensive, especially fuel, which can lead to a rise in overall inflation.

Costlier Imports

Goods such as electronics, machinery, and petroleum products will become more expensive, affecting businesses and consumers alike.

Higher Travel and Education Costs

Indians traveling or studying abroad will face higher expenses as the rupee weakens against the dollar.

What is RBI Doing?

The Reserve Bank of India (RBI) has been actively intervening in the forex market by selling dollars to curb excessive volatility. It is also using monetary tools to stabilize the currency, although global factors limit its effectiveness.

What Lies Ahead?

Experts believe that the rupee may continue to remain under pressure if oil prices stay elevated and global uncertainties persist. Some forecasts suggest the currency could weaken further if conditions do not improve.

Conclusion

The rupee’s fall past ₹93 marks a significant moment for the Indian economy. While external factors are largely responsible, the situation highlights the need for strong macroeconomic management and policy measures to stabilize the currency and control inflation.