Rupee falls against US dollar, what is the reason for weakness in Indian currency?

Rupee vs Dollar: The pressure on the Indian currency is continuously increasing. On Monday, the first trading day of the week, the rupee fell by seven paise to 88.77 per dollar in early trade. Continuous withdrawal of foreign capital and high prices of crude oil have weakened the domestic currency.

Why is the rupee falling?

The rupee opened at 88.73 per dollar in the Interbank Foreign Exchange Market, but soon slipped to 88.77. This is a decline of seven paise compared to 88.70 per dollar on the previous trading day. Meanwhile, the dollar index – which gauges the dollar’s strength against six major global currencies – declined 0.04% to 99.59.

The effect of selling by foreign investors was also visible on the stock market. BSE Sensex fell 258.83 points (0.31%) to 83,679.88, while NSE Nifty-50 was trading at 25,674.15, down 47.95 points (0.19%).

According to stock market data, foreign institutional investors (FIIs) had made a net sale of shares worth Rs 6,769.34 crore on Friday. Continuous capital outflow has put pressure on both the rupee and the market. In the international market, Brent crude has increased by 0.31% to $ 64.97 per barrel. Rising oil prices affect India’s import bill, putting further pressure on the rupee.

foreign exchange reserves fell

There has once again been a decline in the country’s foreign exchange reserves. According to the latest data released by the Reserve Bank of India (RBI), India’s foreign exchange reserves decreased by $ 6.925 billion to $ 695.355 billion in the week ending October 24. There was an improvement in the reserves last week, when it increased by $ 4.496 billion to reach $ 702.28 billion.

Analysts say that due to the strength of the US dollar and the intervention of the RBI, there has been a decline in foreign currency assets. The decline in the value of currencies like euro, pound and yen held in reserves expressed in dollar terms has also had an impact.

According to RBI data, the value of gold reserves declined by $ 3.01 billion to $ 105.53 billion in the week under review. At the same time, Special Drawing Rights (SDR) also declined by $58 million to $18.66 billion. However, India’s reserves in the International Monetary Fund (IMF) have increased by $ 6 million to $ 4.61 billion.

Also read: Slight rise in gold prices, know the latest rates in your city on November 3