By Admin 
Rupee vs Dollar: Due to increasing geopolitical tensions across the world and sharp rise in crude oil prices, investors are turning to the American Dollar, which is considered a safe investment. Its impact is more on those countries like India, which are largely dependent on imports for their energy needs. At the beginning of the first trading day of the week, the rupee opened at 92.20 against the dollar and soon it slipped to the lowest level of 92.528. Earlier on March 4, the rupee had reached its lowest ever intra-day level of 92.35 per dollar.
Why the fall in rupee?
According to foreign exchange traders, due to the increasing conflict in West Asia, there has been a huge jump in the prices of crude oil, which has increased the pressure on the currency of a big oil importing economy like India. Global oil benchmark Brent Crude jumped 25.68 percent in futures trade to reach $ 116.5 per barrel. The increasing tension between the United States, Israel and Iran has led to a sharp rise in the oil market. Anil Kumar Bhansali, Executive Director, Finrex Treasury Advisors LLP said that the rupee will remain under pressure due to the rise in oil prices.
Other currencies of Asia also remained weak on Monday. He says that if the price of crude oil remains above $ 100 per barrel in the coming trading sessions, then the rupee may fall to the level of 93 per dollar. Meanwhile, the US Dollar Index, which measures the strength of the dollar against six major currencies, increased by 0.66 percent to 99.64.
A huge decline was also recorded in the domestic stock market. BSE Sensex fell 2,345.89 points to 76,573.01 in early trade, while Nifty 50 fell 708.75 points to 23,741.70. According to stock market data, Foreign Institutional Investors had sold shares worth a net Rs 6,030.38 crore on Friday.
What will be the impact on India?
India is the third largest crude oil importer in the world. In such a situation, any change in global energy prices has a direct impact on the country’s economy. When oil prices rise, India’s import bill increases. Since oil is paid in dollars, when the rupee weakens, India has to spend more local currency to buy oil. Apart from this, due to oil becoming expensive, the fiscal deficit of the country can also increase and there will be pressure on inflation.
Weak rupee also affects investor confidence. In times of global uncertainty, investors often withdraw money from the stock market and turn to safe investments like gold and silver. However, some sectors also benefit from the weak rupee. Companies in sectors like IT, pharma and textile earn their income in dollars, hence weakening of rupee may increase their income.
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