Rupee rates fall to its lowest ever ie crashed down to 70.50 against US dollar bringing about a big change in the economy of India. The import price and tax will automatically rise which in turn will create a huge problem for businessmen in India. Oil importing bills will also jump with the fall of rupee.
After the demonetization of higher currency initiated by Prime Minister Narendra Modi people have already undergone cash crunch and now with the fall of rupee informal sector and small businesses will be further killed.
Month-end dollar demand from importers and a broad decline in other Asian currencies weighed on the rupee. The rupee is down nearly 9% against the US dollar so far this year amid concerns over higher oil prices. The rupee was trading at 70:51 against the US dollar.
In a report Moody’s Investors Service noted today that higher oil prices will contribute to India’s higher current account deficit but the gap will remain significantly narrower than five years ago. Moody’s also noted that higher oil prices than in the last two years and rising interest rates are raising pressure on the Indian government’s budget and current account. The central government deficit will be wider than targeted in the short term but a temporary fiscal slippage, if any, will not offset India’s robust nominal GDP growth and large domestic financing base which helps keep government’s debt burden broadly stable, it added.
The rupee today hovered near record low against the US dollar. The rupee was trading at 70.38 a dollar, not far from the all-time low of 70.40 a dollar, hit on 16 August. Traders said that month-end dollar demand from importers weighed on the rupee.