How does the Value of the Indian Rupee fall against US$?
India is a major importer of some basic amenities like crude oil, metals, electronic items, etc. And whenever India imports anything more another nation makes payment in US$. Thus when the Indian Rupee is falling, against US Dollar, India needs to pay more for the same item. This results in increases in the actual price of the stuff and this price hike keeps on passing from manufacturer to the customer. Thus whenever the Indian Rupee falls against US$ the prices of essential goods and services increase.
On Tuesday, July 18th, 2022 the Indian rupee observed a record low of INR 80.05 in the international market.
Causes Of Rupee Falling Against US Dollar And Its Effect
Whenever the value of a currency falls, it badly impacts that nation’s economy and results in a higher rate of inflation. The value of any currency falls or rises based on the demand for one currency over another. For example, if there is a higher demand for the US dollar than the Indian Rupee then the value of the Indian rupee falls against US Dollar and vice-versa. The demand for a currency is driven by the nation’s total imports and exports. Like if India imports more than it export it raises the demand for the US dollar oversupply thus resulting in a fall in the value of the Indian rupee against the US Dollar.