The dollar index, which compares the value of the dollar to a basket of international currencies, is up more than 9% this year and reached its highest level in 20 years.
The dollar-rupee exchange rate is affected as money leaves India, which causes the rupee to weaken.
Rising imported inflation is the outcome of downward pressure on the rupee’s value placed on already high import prices for petroleum and raw goods.
Why Did The Cost Of The Rupee Fall I’m Comparison to Dollars?
The expanding trade deficit, which is being caused by an increase in imports that is outpacing exports, is the main reason why the rupee is losing value against the dollar. The steep increase in crude oil prices during the Ukraine conflict is the primary cause of the rise in imports.
The cost of imports will rise as the dollar appreciates against the rupee, forcing importers to fork over more money for a given amount of dollars. Additionally, importers must pay more because most international trade is conducted in US dollars. In a nation with an import-oriented economy, this means that a falling rupee will make imports more expensive and put more strain on consumers’ budgets.
Dollar Touches INR 81
Weighed down by the strong dollar and investors’ risk-off attitude, the rupee lost 44 paisa and fell for the first time below the 81-mark against the U.S. dollar in early trade on September 23, 2022.
Forex traders cited the rise in geopolitical risk in Ukraine and U.S. rate increases. The Fed and Bank of England reduced risk taking in an effort to control inflation. Additionally, factors that impacted on the local currency included the strength of the American dollar in international markets, a downward trend in domestic equities, and risk-off attitudes due to the rise of geopolitical danger in Ukraine.
