Mumbai, 28/12/2024: On Friday, the India Rupee (INR) dropped to an unprecedented low of 85.73 against the US Dollar, marking the first time in history that the rupee has reached such a value. This sharp depreciation of the INR comes amid a combination of factors like a sustained nine-day surge in demand for the US Dollar and the expiry of end-of-month currency contracts. These factors have put a lot of pressure on the rupee, making it reach its lowest point ever.
In December alone, the rupee has fallen by 3 percent against the US Dollar, which has worried market experts and raised concerns about India’s economy. The rupee is weakening because there is more demand for dollars, especially from businesses that need foreign currency to pay for imports. This demand is growing because global trade is changing, and India is having trouble selling its goods abroad, even though it imports a lot. The global slowdown is making it harder for Indian products to compete, which is putting more pressure on the rupee. If this trend continues, there are worries that the rupee could hit its lowest point in two years by the end of the year, making India’s economic problems even worse.
Experts say there are several reasons why the rupee’s value keeps falling. One main reason is the end-of-month expiry of currency contracts, which causes a temporary increase in demand for US dollars as traders and investors settle their deals. This demand has been made worse by India’s high import levels, especially in oil and other important goods, which increases the need for foreign currency. At the same time, India’s exports have been struggling because global demand is weak, adding to the rupee’s decline. These combined factors have created a tough situation for the rupee, weakening it to record-low levels and making the economy more uncertain.
