By Admin 
- Expensive oil, weak rupee will increase the expenses of common people.
Currency Update: The effect of increasing tension between America and Iran is now visible on India’s pockets as well. On Thursday, the Indian rupee opened at 96.2475 against the dollar. It has reached very close to its lowest level of 96.96 made in May. The rupee has weakened by about 1.7% so far this month.
Why is the rupee weakening?
The biggest reason for this is the rising prices of crude oil. After increasing US-Iran tension, Brent crude has reached above $ 85 per barrel. There is a fear that if the situation worsens, the oil supply from Hormuz may be further affected. A large part of the world sends oil through this route. India buys more than 85% of its crude oil needs from abroad, hence as soon as oil becomes expensive, the demand for dollars increases and the rupee starts weakening.
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Why did the market panic due to increasing tension?
On Wednesday, America attacked Iran’s coastal defense and missile bases. After this, Iran warned of further reducing energy exports. In such a situation, the world fears that oil supply may be affected. For this reason, investors turned towards the US dollar which was considered safe, which further increased the pressure on the rupee.
Why is the effect of RBI’s efforts not visible?
A few weeks ago, when crude oil became cheaper, the Reserve Bank had taken several steps to increase the inflow of dollars. It was expected that the rupee would strengthen but now oil has become expensive again. Due to increase in demand for dollars in the market, the effect of those steps of RBI has weakened.
What effect will it have on your pocket?
- Both weak rupee and expensive oil can increase the expenses of common people.
- Petrol and diesel can be expensive.
- Due to cost of air fuel, flight tickets may become expensive.
- The prices of mobiles, laptops and other imported goods may increase.
- Expenses for studying abroad and traveling abroad may increase.
- Many imported food items can also become expensive.
If the pressure on both oil and rupee continues for a long time, inflation may increase. In such a situation, it may be difficult for RBI to reduce interest rates, which may affect loans and EMIs.
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What will happen next?
Now the whole world is eyeing the next step of America and Iran. If tensions increase, crude oil may become more expensive and the rupee may remain under pressure. If the rupee goes below the level of 96.96 then it will be the weakest level ever against the dollar.