RUPEE TOUCHES 70-MARK AGAINST THE US DOLLAR
On Tuesday, August 14th 2018, rupee crossed the 70-mark for the first time against the US dollar marking its lowest ever rate at 70.10 rupees for 1 USD. This vanquishment was accompanied by the currencies of other emerging markets and was triggered by the crash in Turkish Lira. However, the rupee witnessed some growth to close at around 68.90 by the end of the day.
The rupee which has lost over 7 per cent this year is one of the worst performing emerging market currencies.
Imports to Witness Massive Hikes
Following the statement from the government of India asking the people to not to worry about the fall in rupee even if it touches 80-mark, the cost of imported goods is likely to witness massive hikes. This is because the cost of importing these goods to India will increase as the exchange of goods takes place using dollars. The rupee has witnessed a downfall from 62 to 70 since last year which according to the importers is the reason behind the 15% increase in imports since the previous year.
RBI Steps in Aid
In order to keep a control on the rate of fall of rupee, the RBI keeps on intervening from time to time. To do so, the Reserve Bank of India(RBI) sells dollars to stabilize the currency. In the past years, the central bank of India has sold more than $500 million in order to fight the deposition of its currency. The RBI stepped in to rescue its currency again this time which was the reason behind the slight growth in the rupee.
Students who are studying abroad due to the blessing of education loans provided by the government will suffer as the loan they get is in rupees whereas their expenses are in foreign currencies. Electronic devices such as mobile phones, televisions etc. will also observe an increase in their prices. Automobile sector will get affected too as the imported components these companies use will cost more now leading to the increase in cost of manufacturing.