Indian Rupee Hits All-Time Low
The Indian Rupee appears to be in turmoil along with Indian indices, as the country's currency hit an all-time low, crapping the bottom at Rs 85 against a single unit of the US dollar. The United States Dollar is the world's reserve currency. This is the first time the Indian currency has breached this mark in its lifetime.
Indian Markets In Decline
This comes at a time, when the Indian markets are also trailing with major cuts in the intraday trade on Thursday, December 19. The Sensex and Nifty have opened for the day's trade on the day with deep cuts at the bourse. Sensex dropped by over 1,000 points and the NSE indices, Nifty 50 and Nifty Bank also dropped by over 1 per cent.
The Strengthening Of US Dollar
Coming to the Indian currency, the weakening of the currency is supplemented by the rise of the US Dollar, apart from other factors, that are at play.
The United States Dollar has been on the rise since Donald Trump's victory in the US presidential election held on November 5, 2024.
US President-elect Donald Trump | File/AP
What Does A Weak Currency Mean?
Although a weak currency is said to be good for countries looking to maximise export and help industries in the country to sell goods outside teh country, making them competitive, the fall in the value of the currency also brings bad news to other elements in the economy.
A weaker currency often makes imports expensive, thereby pushing break, and thereby slowing imports into the Indian market. In addition, a weaker currency also adds to the woes of the general population of the country, as it diminishes the purchasing power of the said citizens.
This reduced purchasing power leads to a truncation of consumption. In addition, all these factors could also foster inflation.
The current retail inflation rate measured Consumer Price Index or CPI stands at 5.48 per cent, which is beyond the RBI's threshold of 4 per cent.
