On wednesday, the rupee fell sharply by 105 paise- its biggest single session fall in 20 months- to close at a five-month low of 74.47 against the US dollar, Amid concerns over Covid-19 and the RBI’s newly announced programme to buy bonds worth Rs 1 lakh crore this quarter. These factors come on top of a strengthening dollar against the euro, which is resulting in a relative weakness of the rupee.
RUPEE- In last 1 year;
After peaking at around 77 against the US dollar on April 21 last year, the rupee started appreciating and reached 72.27 on March 23 this year. The move to 77 had been preceded by a sharp rally in the dollar index before the Covid-19 pandemic hit the global economy; since then, the gradual appreciation was underpinned by a fall in the dollar index, and a strong flow of foreign direct investment and foreign portfolio investment. FPI inflows in FY21 amounted to over $ 35 billion.
How can the Rupee depreciation impact you?
Depreciation in the rupee impacts all expenditure in dollar terms- imports, foreign education, travel, investments abroad, medical treatment etc. On the other hand, if you are an exporter on an NRI sending money back home, depreciation would fetch you more rupees per dollar.