Why the rupee falls: After all, why the rupee falls, know the history of this rupee...
New Delhi: These days, the condition of the Indian Rupee has become very bad. On Monday, the rupee fell to its historic low of Rs 78.28 against the dollar. There was some relief on Tuesday, but the Rupee is still lower at Rs 78. The Rupee had closed at Rs 78.04 to the dollar on Monday, which closed at Rs 78.03 on Tuesday. Even if you don’t take the fall and rise of a few dollars that come in the rupee seriously, they have a big impact on your life.

Understand first what is the significance of falling rupee
A drop in the rupiah against the US currency (dollar) in the foreign exchange market means that the Indian currency is weakening. In other words, you will now have to pay more in imports from America or any country, because you will have to pay in dollars and not in rupees. This means that our foreign exchange reserves will be spent more by importing less than before.

fall of the rupee

The falling Rupee means that we now have to spend more money on imports than before.

How is India suffering from the fall of the rupee?
Let’s understand with an example how the fall of the rupee is a big problem. Suppose you have to pay 1 lakh dollars to import goods. At the beginning of this year, the rupee was valued at around Rs 75 against the dollar. That is, we had to pay 75 lakh rupees for this import. The Rupee fell over Rs 78 as of today. In such situation, we will have to pay more Rs 78 lakh instead of 75 for the same item. That is, a loss of Rs 3 lakh. This figure has been calculated only on the basis of 1 lakh dollars, while the import figures are millions and millions of dollars. Now you can imagine how much loss India is taking due to the falling value of the Rupee.

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Why is the rupee falling?
According to Traders, the sluggish domestic environment, rising crude oil prices and continued outflows of foreign capital from the Indian market weighed on the rupee. Global benchmark Brent crude oil futures rose 0.72% to $123.15 a barrel. According to preliminary stock market data, foreign institutional investors were net sellers in the capital market. He sold shares with a net worth of Rs 4,164.01 crore on Monday.

So why are foreign investors withdrawing money?
Right now, the inflation rate in America has hit a 40-year high and is rising rapidly. It was recorded at 8.6% in May. Inflation in India has also become very high and in May is around 7%. Just as the Reserve Bank of India has hiked 90 basis points twice in the past month and a half to control inflation, the US Federal Reserve is also eyeing a hike.

Economists estimate that this increase could be the largest in 28 years. In such a situation, foreign investors can withdraw their money from the stock market and invest it in America, so that they can make more profit. Foreign investors invest money in India’s capital market because returns are higher here than there. By the way, foreign investors invest money in markets all over the world and where these people invest money is where the market operates.

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What is the relationship between the rupee and the stock market?
The movement of the stock market depends more on market sentiment than on the performance of any company. In these feelings, there is no epidemic, political instability, major financial fraud, jobs, interest rates, the value of the rupee is the most important. If the rupee weakens in the foreign exchange market, its direct effect is visible in the stock market. Likewise, if the stock market goes up, the rupee also looks strong. That is, if they are seen, both depend on each other. If foreign investors withdraw money from the capital market, it will cause the stock market to fall, which will have a direct impact on the rupee.

Does this mean that the rupee will go down further now?
On Monday, the first day of this week, the rupee fell sharply and hit an all-time low. On the other hand, the Rupee showed slight strength on Tuesday and only strengthened by 1 paise. One thing to note here is that so far the US Federal Reserve has made no announcements regarding interest rates. It is estimated that the largest increase will be seen in 28 years. If the forecast is correct, the rupee will undoubtedly depreciate further as foreign investors withdraw more money from the Indian market.

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