There is a huge decline in rupee against the dollar. In Thursday’s session, the rupee is open with a weakness of 29 paise. The price of 1 dollar has reached 65 rupees. Experts agree that this decline in rupee can also be seen in the coming sessions, in which the rupee can touch the level of rupees 65.50 against the dollar.
According to Ajay Kedia, chief of Kedia Commodity, the major reason for the rupee’s weakness in the market is the signal of increasing interest rates by the Fed. The Fed said in the minutes released on Wednesday that there is full scope for increasing the interest rates due to Boost in the US economy. After this, the dollar index is getting stronger. According to Kedia, rupee can touch level of 66 in the coming weeks between domestic and global signals.
Three major causes of rupee fall
• The biggest reason for the decline in rupee is linked to the country’s largest banking scandal recently exposed. Banks have tightened on import finance after the case of fake LoU. Banks have begun seeking more documents before importing them from the importers. In the import finance, the hardships are making a huge dollar purchase, which is a major cause of weakness in rupee.
• The second major reason for rupee weakness is to strengthen the dollar in front of currencies worldwide. Upon the return of the American economy, there is hope for an increase in interest rates. In the Fed minutes issued on Wednesday, the economy has given strong indication of rising interest rates in the wake of recovery in the economy. This is the reason why the dollar is getting stronger and rupee is constantly getting weak.
• The third major reason for rupee weakness is the huge sale of foreign institutional investors in the stock market. When foreign institutional investors sell in the stock market, directly, the country is going out in large quantities of dollars. Dollar going out of the country is a major reason for rupee weakness.