Rupee hits all-time low against dollar, will inflation rise?
The Indian rupee fell 28 paise to its lowest level ever at 90.43 in early trade on Thursday.
The price of one US dollar had crossed 90 rupees mark on December 3.
Forex traders say the rupee remains under pressure due to limited central bank intervention and high dollar demand from importers ahead of a key decision by the Monetary Policy Committee.
The rupee opened at 90.36 in the interbank foreign exchange market. In early deals, it weakened further to a record low of 90.43, a drop of 28 paise from the previous close.
The opposition is attacking the Modi government at the Centre for this decline.
Rupee has fallen about 5% in 2025, putting it on track to record the sharpest decline in a year since 2022. This makes the rupee the worst-performing Asian currency this year.
On Thursday, Congress chief Mallikarjun Kharge alleged that the rupee was weakening because of the policies of the Prime Minister Narendra Modi-led government. “If the government’s policy were good, the value of the rupee would increase,” he told reporters outside Parliament.
“The weakening of the rupee shows that our economic condition is not good,” the Congress leader said. “The government may pat itself on the back, but our currency has no value in the world.”
US Tariffs
The US has imposed a 50% tariff on India. It has been expected for a long time that the US would reduce the tariffs. However, no agreement has been reached between the two countries. This has resulted in a lack of support for the rupee, impacting foreign investment. Furthermore, the rupee weakens further when imports increase and exports decrease. In such a situation, the demand for the dollar increases, leading to a weakening of the rupee.
Risk of Inflation
When the rupee weakens, the risk of rising inflation increases, which becomes a major concern for the common man. Furthermore, the rupee's weakness also reduces the confidence of foreign investors, which is reflected in the stock market.