The rupee has performed poorly against the dollar this year. The rupee has weakened by three percent against the US dollar in 2024. The rupee has been affected by the slowdown in the economy and the strengthening of the dollar in global markets.
The rupee hit a new all-time low at the end of 2024. The rupee has fallen by three percent till December 27 as compared to the level of 83.19 per dollar on January 1 this year. On December 27, the rupee was at a low of 85.59 per dollar. In such a situation, it is expected that the condition of the rupee will be somewhat better in 2025. The improvement in the dollar has affected the currencies of emerging markets. The impact on the exchange rate of the rupee against major currencies continued in 2024, which is full of events. However, compared to other currencies of the world, the volatility in the Indian rupee has been much less.
Due to this the weakness in rupee increased
The Russia-Ukraine war and the crisis in West Asia, along with the disruptions in trade through the Red Sea, as well as elections in many countries around the world, affected the rupee sentiment. The steps taken by the world’s major central banks and other global factors have not only affected the rupee-dollar level, but it has also affected the exchange rates of currencies in all emerging economies. In fact, the rupee has depreciated less against the dollar than other currencies. The rupee has been in profit against the euro and the Japanese yen. The then Reserve Bank of India (RBI) Governor Shaktikanta Das had said in the December bi-monthly monetary policy review that the Indian rupee has been less volatile than the currencies of emerging markets.
Rupee has fallen sharply in the last two months
In the last two months, the Indian currency has fallen by a record two rupees against the dollar. On October 10, the rupee crossed the important level of 84 per dollar. On December 19, it weakened further and reached a low of 85 per dollar. On December 27, the rupee came to its all-time low of 85.80 per dollar during day trading. On that day, the rupee saw the biggest one-day fall in two years. However, when compared with other global currencies except the dollar, the rupee has strengthened by 8.7 percent against the yen. It rose from Rs 58.99 per 100 yen on January 1 to Rs 54.26 per 100 yen on December 27. Similarly, the rupee has improved by five percent against the euro after August 27. It was Rs 93.75 per euro on August 27, which fell to Rs 89.11 per euro on December 27.
RBI is engaged in strengthening the rupee
However, despite this, the central bank is making more active efforts to stabilize the rupee-dollar rate. India’s dependence on crude oil imports and growing trade deficit have increased the demand for the US dollar. Anand Rathi Shares and Stock Brokers Director – Commodity and Currency Naveen Mathur said that the RBI has actively intervened to prevent a sharp fall in the rupee.
This is also revealed by the foreign exchange reserve data. Foreign exchange reserves have fallen from a record high of US$ 704.89 billion at the end of September to $ 644.39 billion as of December 20, 2024, which is its lowest level in almost six months. Foreign exchange assets also include the impact of the rise or fall of non-US currencies such as euro, pound and yen held in the foreign exchange reserves.
The slowdown in China’s economy also has an impact
India’s external challenges have intensified as China’s gross domestic product (GDP) growth has slowed to 4.8 per cent, reducing demand for Indian exports. In addition, tensions in West Asia and supply chain disruptions due to the Red Sea crisis have affected the trade balance of many countries, including India.
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