Friday, 07 Nov, 2025
By: Anshul Vipat
The Indian currency has been on a decline by almost 5 percent since early this year
The Indian rupee hit another record low this week declining 15 paise to close at 78.13 against the US dollar with experts blaming it on persistent foreign fund outflows and a jump in crude oil prices. At the interbank foreign exchange market, the local currency opened at 78.00 and traded in a narrow range. It finally ended at 78.13, down 15 paise over its previous close of 77.98. The Indian currency has been on a decline by almost 5 percent since early this year. Early this month, it had nosedived to a record low 77.80. The previous life low of 77.79 was touched on May 17.
Why is Rupee Declining?
The Indian currency has been weakening as compared with the US dollar due to the outflow of foreign investments and increasing global insecurities arising out of Russia-Ukraine war. It is also attributed to surging crude oil prices. Global markets are also affected with rising COVID outbreaks in China forcing a lockdown in several important cities in the country. Another reason being citied is surging interest rates all across the world.
The value of the rupee is also depreciating due to massive selling by foreign investors. As money flows out of India, the rupee-dollar exchange rate gets impacted, depreciating the rupee. Data Central Depository Services Limited (CDSL) showed that Foreign institutional investors have pulled out over Rs 1,50,000 crore in the first five months of 2022 itself. This is almost equal to what they brought between 2014 and 2020. To make matters worse, RBI had on June 8 raised the key interest rate by 50 basis points, the second increase in five weeks.
Impact on you
Such depreciation puts considerable pressure on the already high import price of crude and raw materials. India currently imports 85% of its oil demand and the rise in crude oil prices directly increases import bill and expenses. All this leads to inflation, and a depletion of our forex reserves because we’re sending out more dollars on crude oil. The inflation rate has already breached RBI’s comfort zone of 2-6 per cent. On the other hand, retail inflation has galloped to a 95-month high in April at 7.8 percent.
Apart from crude oil, New Delhi is also heavily dependent on fertilizer imports and fertilizer subsidy is set to hit a record high. Organic chemicals, machinery items, electronics and pharmaceuticals, labour-intensive exports like textile may also take a hit
