Falling Rupee Rings Alarm Bells-Five Major Market Losses Could Shake The Economy

Business News: The impact of global tension and US tariffs is weakening the Indian rupee. The rupee has reached an all-time low against the US dollar. On Monday, the rupee reached 88.33, which is more than last Friday's 88.30 rupees. The fall of the rupee can cause a big dent to the country's economy in the coming times. Let us understand what 5 major losses the country can suffer due to this.

Ever since US President Donald Trump imposed a 50 percent tariff on India, the Indian currency has changed its course. It would not be an exaggeration to say that the rupee is going through its worst days. Statistics show that the Indian currency is going through its worst times. The main reason behind its fall is the tariff, apart from this, the continuous hedging demand from importers and FPI selling of both debt and equity have increased the pressure.

GST Decision And RBI Intervention

Experts say that the upcoming decision of the GST Council may provide some relief. At the same time, Anidya Banerjee, head of currency and commodity research at Kotak Securities, said that if the spot interest rate reaches close to 88.50, then RBI's intervention is expected. If the US tariff is not withdrawn, the problem may increase and the country may have to face huge losses.

Disadvantages of weakening of rupee

If the currency of any country weakens, then its trade becomes expensive. The prices of things may go down in the international market, but it is not considered good news for that country. Something similar is happening with India right now. If the fall in the rupee continues, then the market may suffer a big dent.

Weak Rupee Fuels Rising Inflation

Inflation- India imports major commodities like crude oil, so a weak rupee makes these imports more expensive, which increases fuel prices and increases the cost of transportation and other commodities. The weakening of the rupee will have a direct impact on inflation. This increases the risk of high inflation.

Costly Imports Hurt Business Profits

High import cost- A weakening rupee forces businesses and consumers to pay higher prices for imported goods such as electronics, machinery and raw materials. This can reduce the profits of companies and reduce the purchasing power of consumers.

Trade Deficit Widens Further Danger

Increasing trade deficit- A weak rupee makes imports more expensive and if the demand for imports remains high, the country's trade deficit may increase. This threatens to put further pressure on the rupee.

Foreign Investors Pulling Out Capital

Withdrawal of foreign investment- A falling rupee often indicates that foreign investors are withdrawing money from the Indian stock and bond markets. This increases pressure on both the rupee and the market.

Rising Corporate Debt Adds Pressure

Rising corporate debt: If the rupee weakens, Indian companies that have taken loans in foreign currency have to pay more rupees to repay them. This affects both their financial position and profitability, and the value of shares can also fall.