Rupee fall: Why India’s struggle for dollars will continue

Rupee fall: Why India's struggle for dollars will continue

The question being asked yesterday was “why is the rupee falling against the dollar”. The answer is very simple. The demand for American dollars was more than that of the Indian rupee leading to the rupee rapidly losing value against the dollar.

This situation is likely to continue in the days to come with the demand for dollars in India being more than their supply. And this will have a huge impact on the dollar-rupee exchange rate, which crossed 60 rupees to a dollar for the first time yesterday.

 Collapse of Indian rupee to a lifetime low of 69.10 against the U.S. dollar will not give an extra edge to domestic exporters, but provide a level-playing field in global market, FIEO said.

Federation of Indian Export Organisations (FIEO) director general Ajay Sahai said that the development will not provide any additional support to exporters as currencies of other emerging economies, including China, too are depreciating. “It will provide a level playing field to our exporters. It will not provide the much needed support as India is not singled out,” he said.

India’s exports grew 20.18% to $28.86 billion in May — the highest in six months — even though trade deficit widened to a four- month high of $14.62 billion. The rupee had touched a lifetime low of 69.10 against the U.S. dollar as rising crude oil prices deepened concerns about India’s current account deficit and inflation dynamics.

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