The Indian Rupee crashes to a record low of Rs.81 per USD
by The Canadian Parvasi
Falling to Rs.81 per one US Dollar, the Indian Rupee just recorded its most significant drop in the past six months. At the Interbank Foreign Exchange Market, the rupee was traded at 80.71 against the American dollar, a substantial and worrisome loss.
It is also worth noting that the growing tensions between the Russian Federation and Ukraine have also likely caused a notable change in the exchange rate as it affects both the value of India’s own currency as well as the dollar index. The US Federal Reserve also increased its interest rates by 75 points, further lowering the value of the Indian rupee consequently. This is likely the start of a series of interest rate hikes by the US Federal Reserve as the reserve has explicitly stated that the rates will keep on increasing till 2024.
Not only India but almost all countries in Asia will be affected by this. China also faced the repercussions of the rise in interest rates as the Chinese Yuan opened at 7.11 per one US Dollar.
Naveen Kulkarni, Chief Investment Officer at Axis Securities PMS said on the matter, “With the US Fed increasing rates by 75 bps and hinting at more rate hikes in the future, we believe the Dollar index can see a significant increase, implying most major market currencies, including INR should be under pressure. If we start seeing INR depreciating, then from a USD returns perspective for FPIs, India becomes unattractive. We could also witness a reversal of FPI flows in the near to medium term, which will increase market volatility.”
It is speculated by experts that this fall in the value of the rupee will result in a consequent rise in the repo rate by the RBI to cope with this ordeal.