Rupees vs Dollar: On Monday, June 13, 2022, the first trading of the week, the rupee started with a big fall. Rupee fell below 78 per dollar for the first time. The rupee opened lower by 28 paise at 78.11 against the US dollar. The fall increased during trading and the rupee made a record low of 78.16 per dollar. On Friday, the rupee had closed at 77.83 per dollar. The weakening of the rupee will have effect on the common man and the economy of the country. A weak rupee makes it expensive to import goods from abroad. However, for exporters, the weakness in the rupee gives an opportunity to earn extra.
The demand for dollars has increased due to rising prices and slow growth. Inflation in the US has reached a 40-year high and it is 8.6 percent on a yearly basis. Due to this, the dollar index rose last week. The dollar index once again crossed the level of 104 while the US 10-year benchmark bond yields crossed the level of 3.15 per cent. Japan’s yen and euro also fell to record lows against the dollar.
Foreign Institutional Investors (FIIs) continue to sell in the domestic market. FIIs were sellers in the domestic market for the eighth consecutive month. Since October 2021, foreign investors have withdrawn more than Rs 3.45 lakh crore from the market.
The weakening of the rupee not only has disadvantages, but also has some advantages. Good money is also available for goods going from India to foreign countries. A weak rupee is beneficial for those exporting goods or services from the country. Products like parts, tea, coffee, rice, spices, marine products, meat are exported from India and the exporters of all these will benefit from the weakening of the rupee.
The weakening of the rupee means that now the country will have to spend more money to buy the same amount of goods. Imported goods will be more expensive. This includes gold, crude oil because the price of these commodities in the international market is fixed in dollars. At present, crude oil prices are rising and the rupee is at a record low, so importing petrol and diesel will be expensive.