The rupee has weakened due to the increase in US treasury yields and weakness in other Asian currencies against the dollar. Foreign investors are continuously selling in the stock market. The global political crisis has deepened due to the Israel-Hamas war, due to which a rise in commodity prices is being seen. The price of crude oil has also been affected due to which the rupee has weakened against the dollar.
Why is rupee weakening against dollar?
Indian Rupee has closed with a historic fall against one US dollar. On November 1, 2023, the rupee fell by 9 paise and closed at its lowest ever level of 83.33. Earlier in October last year, the rupee had closed at 83.29 against the dollar, which was a historic low. The rupee has weakened due to the increase in US treasury yields and weakness in other Asian currencies against the dollar.
Foreign investors selling in the stock market
Foreign portfolio investors are continuously selling in the stock market. Foreign investors have sold shares worth Rs 25,575 in the Indian equity market in the month of October. So Brent crude is trading at $ 86.16 per barrel with a rise of 1.34 percent.
If the trend of decline in rupee against dollar continues, imports may become expensive for India. Government oil companies will have to spend more money to import petroleum products, while importing electronics items may also become expensive. India also imports edible oil and pulses on a large scale. In such a situation, import of edible oil and pulses can become expensive.
What will happen if the rupee continues to weaken against the dollar?
There is a festive season in the country and there is a rise in the demand for gold. India is dependent on gold imports for its consumption. Due to the strength of the dollar and weakness in the rupee, importing gold will be expensive, which may impact festive demand.
On Wednesday, the rupee opened at the level of 83.26 in the currency exchange market and weakened to a low of 83.35. At the close of the exchange market, the rupee closed at its historical low of Rs 83.33 (provisional) per dollar. On Tuesday, October 31, 2023, the rupee had closed at the level of 83.24 against one dollar.