DNA Exclusive: The free fall of Rupee and how will it impact India

Zee News' Rohit Ranjan makes an analysis of the falling rupee and what it means for the Indian economy.

Pic Credit: Twitter

New Delhi: The fall of the Indian rupee against the US dollar has become a daily discussion now. The rupee has crossed the 80-mark against the dollar and after this, people are confused about what this means for the Indian economy. What does it mean for the rupee to be low? Is the rupee also making India weak on the economic front? And is this historic fall in the rupee going to be a big explosion of inflation? 

In today's DNA, Zee News' Rohit Ranjan makes an analysis of the state of the Indian rupee, where its heading and how it will impact the Indian economy.

रुपये का गिरना ब्रेकिंग न्यूज क्यों नहीं? देखिए #DNA LIVE #Rohitranjan के साथ | @irohitr

+ये रुपया इतना गिरता क्यों है?
+डॉलर के सामने रुपया क्यों धड़ाम?
+समुद्र ने लौटाया इंसानों का कचरा!
+घर में प्लास्टिक, मतलब खतरा है! https://t.co/yC6UQNlUFy — Zee News (@ZeeNews) July 20, 2022

When one says the rupee is low, they mean the purchasing power of the rupee against dollar has decreased. This means that India will have to pay more when doing business in the international market. So, for instance, India will have to pay more for crude oil now and other imports.

This will lead to a increase of prices in the goods and services that are imported to India. Petrol prices, imported smartphones and cars’ prices have also risen. 

Why is the rupee falling?

The rupee is falling due to many reasons. One of the reasons is inflation, the prices of goods that India imports has increased. The Ukraine-Russia war has caused a hike in crude oil prices and made it a volatile market.

Foreign investors have withdrawn of 30 billion dollars i.e. 2 lakh 40 thousand rupees in Indian rupees from India's stock market this year. This has had a big impact on rupee’s depreciation.

Falling rupee: What are the pros and cons?

The cons of the rupee falling are increased spending on imports, high cost of studying abroad, vacationing and taking loans from abroad. Benefits of the rupee falling is that the Government of India and companies that export goods to other countries will get more money. 

Overall, the fall of the rupee is still worrisome. This is why the Reserve Bank of India has started selling dollars from foreign exchange reserves to keep the rupee’s value stable. The RBI has so far sold $32 billion, or about 2.5 lakh crore dollars, from its foreign reserves.  However, it’s not just the rupee which is falling against the dollar, other currencies such as Yen, Pound, Euro are also facing the same fate.