The Indian rupee dipped under the crucial psychological level of Rs. 90 for the first time. According to analysts, this may be due to a mixed impact from weak foreign investment inflows, rising dollar demand from importers, and global economic uncertainties.
The delay in an important India-US trade agreement has exacerbated the rupee’s weakness, pushing it to its lowest level in years.
A depreciating rupee means the cost of imports automatically rises, which in turn leads to price hikes for other commodities. The prices of electronic gadgets, cars, and cosmetics, as well as other products that use imported components, will be higher now.
The cost of daily items such as edible oils and products is expected to rise. This ripple effect will also cause a hike in transportation and logistics costs, which will further feed the inflationary pressure.
Price rises are going to hit consumer segments that depend on imported goods harder. Farmers buying fertilizers and household electrical products are expected to become more expensive. Everyday essentials might become even costlier, affecting middle and lower-income groups adversely.
Also Read: Rupee Crashes Below 90 Per Dollar for the First Time: What’s Driving the Sharp Decline?
US dollar strength and rupee weakness are predicted to increase inflation and raise the Reserve Bank of India's (RBI) financial tightening to concerning levels.
Higher borrowing costs could halt consumer demand and slow economic growth. Though exporters may benefit from a weaker rupee, as their products become more competitive in foreign markets, profits might take time to materialize.
The rupee’s stability above or below the Rs. 90 level will be monitored by market observers in the upcoming weeks. Oil price trends, government interventions, and changes in global economic fortunes will all play decisive roles. It remains to be seen how the market will react to further fluctuations and how the rupee will move during a period of volatility.