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- Rupee Crosses 81 Against Dollar For The First Time, Effect Of US Fed Hike Interest Rate
New Delhi2 hours ago
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The Indian rupee fell 38 paise to an all-time low of 81.24 against the US dollar in early trade today. The reason for this is the demand for dollars from importers and the increased interest rates by the US Federal Reserve.
After outperforming Asian currencies for a long time, the rupee was the biggest loser among Asian peers on Thursday. According to Bloomberg, the rupee had closed at 80.86 on Thursday and opened at 81.06 today. The 52 week range of Rupee is 73.61-81.24.
The effect of raising the interest rate of the US central bank
The US central bank on Wednesday raised interest rates for the third time in a row. The Federal Reserve has raised interest rates by 0.75% to 3-3.25%. Interest rates have been increased to control inflation. Inflation in America has reached a record high of 40 years.
Expensive to travel and study in America
A fall in the rupee means traveling and studying in America has become expensive. Suppose Indian students in America used to get 1 dollar for 50 rupees when the value of rupee was 50 against the dollar. Now for 1 dollar, students will have to spend Rs 81. Due to this, from fees to living and food and other things will become expensive.
How is the value of a currency determined?
If the value of any other currency decreases in comparison to the dollar, then it is called falling, breaking, weakening of the currency. Currency depreciation in English. Every country has a foreign currency reserve from which it conducts international transactions. The effect of decrease and increase in foreign reserves is reflected on the price of the currency.
If the dollar in India’s foreign reserve is equal to the US rupee reserves, then the value of the rupee will remain stable. If the dollar decreases with us, the rupee will weaken, if it increases, the rupee will strengthen. This is called floating rate system.
