InvestorQ : What is happening to the Indian rupee currently? Why is it so much in the news?
priya Shah made post

What is happening to the Indian rupee currently? Why is it so much in the news?

3 years ago
The Indian rupee has been falling for many consecutive days, touching a record low of 72.91 on September 12, 2018. The rupee had previously closed at 72.69 against the dollar.
A fall in any currency is known as depreciation so the rupee is currently depreciating against the dollar. In 2018 alone, the Indian rupee has fallen close to 14%. Rupee has, in fact, been the worst-performing major emerging market (EM) currencies in 2018.
The reason for this fall in the Indian currency can be attributed to various factors such as surge in oil prices, trade war concerns, and the contagion effect of Lira (Turkish currency) crisis on emerging market currencies.
- Oil prices are continuing to rise on back of wariness about falling crude oil inventories and looming sanctions against Iran, possibly tightening the supply market.
- The hurricane Florence, which is set to hit the US East Coast, has also pushed up prices.
- The trade war is continuing to weigh on the markets, especially considering the consistent volley of words between the world’s largest economies.
The central bank, Reserve Bank of India, is not intervening enough in the forex market to supply dollars to protect the domestic currency. The situation is worsened by the fact that FPIs took out Rs. 1454 crore from the Indian market, thereby leading to a severe dollar shortage.
Thus, it appears that all factors are conspiring against the rupee, contributing to its nosedive and dubiously making it the worst performing emerging market currency.