look news india
Mumbai: The Indian rupee on Thursday fell to a new low of 19 paise against the dollar amid heavy demand for the US currency from local importers due to high global prices of crude oil and gold and silver. A stronger dollar will make the country's import bill, especially crude oil, costlier, leading to inflation.
The rupee closed at 83.46 against the dollar on Wednesday, falling 19 paise to 83.65 today. The dollar index has strengthened against most Asian currencies. The Chinese yuan has also reached its lowest level since November, 2023.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 105.44 late in the evening. The dollar also strengthened due to interest rate cut by the Swiss National Bank.
On the domestic front, the rupee is weakening against the dollar due to high global prices of crude oil and gold-silver, withdrawal of foreign investors from Indian equities and increased demand for the dollar by importers.
Foreign investors have sold $2.60 billion in Indian equities so far in the current calendar year. But debt instruments have seen an inflow of $7.50 billion ahead of the inclusion of Indian bonds in the JP Morgan index on June 28. The inclusion date is likely to see an inflow of $2 billion into Indian bonds in a single day, which is expected to support the rupee.
In April, the Reserve Bank made net sales of $3.60 billion. An analyst said that despite the strength of the country's economy, the weakness of the rupee will increase inflation at the domestic level.
As the dollar strengthens, the import deficit increases. India imports more than 75 percent of its crude oil requirement. High prices of petrol and diesel can be the main reason for rising inflation. The rupee is still performing quite well in Asia after the Hong Kong dollar. The Indian rupee, which weakened against the dollar, was seen strengthening against the euro and pound on Thursday. The euro fell 7 paise to Rs 89.59 and the pound fell 14 paise to Rs 106.01.