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Data | Hitting record lows: What is driving the rupee’s fall?

By Jasmin Nihalani

On Monday, the Indian rupee slumped to an all-time low of 77.36 against the U.S. dollar. Foreign outflows and elevated oil prices have accelerated the rupee’s fall. This has coincided with foreign portfolio investors continuing to withdraw funds from Indian equities and remaining net sellers for the past seven months. Moreover, since March, crude prices have hovered above the $100 per barrel-mark on most days following Russia’s invasion of Ukraine. In this scenario, a weak rupee will further inflate the country’s import bill. India’s foreign reserves have also been dented due to the central bank’s intervention in the spot market to prop up the Indian unit. 

At its lowest point

The chart shows the Indian rupee exchange rate vis-a-vis the U.S. dollar between January 2010 and May 2022. The value of the rupee reached an all-time low on May 9. The rupee’s previous low came on March 7, 2022 when it touched 76.92.

Chart appears incomplete? Click to remove AMP mode

Intense selling

The rupee’s fall has been accentuated by an exodus of foreign portfolio investors from the stock market. Investors have resorted to intense selling as April was the seventh consecutive month that foreign outflows were higher. So far, in calendar 2022, foreign investors have pulled out $18.27 billion from the Indian stock market.

Surging crude prices

The chart shows the month-wise value of India’s crude imports (in $ billion). Crude oil prices have soared due to the Russia-Ukraine crisis. As the rupee depreciates, it will increase India’s import bill and widen the trade deficit.

Denting forex reserves

Foreign reserves fell below $600 billion in the week ending April 29. The decline is likely due to the Reserve Bank of India’s intervention in the forex market to arrest the rupee’s fall by selling dollars. The chart shows week-wise India’s foreign reserves (in $ billion) from January 2021 to May 2022.

Source: IMF, NSDL, CMIE

Also read: India’s vulnerability in the global economic tumult

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Dive Deeper:
Explained: What led to record fall in rupee and how it may affect economy
NEW DELHI: The see-sawing rupee has given Indian investors a tough time in the past few days. On Monday, the…
What plunged the rupee to its lifetime low against the dollar
Strong spending by the government to boost investment and growth is more important for reinforcing investor confidence in the Indian…
Rupee slips 5 paise to close at all-time low of 77.55 per dollar
MUMBAI: The rupee pared its initial gains and settled 5 paise lower at its fresh lifetime low of 77.55 against…
Soaring inflation gives investors the jitters, stocks continue dive
Fears of aggressive interest rate hikes by the US Federal Reserve following unexpectedly high inflation in the world’s largest economy…
One subscription that gives you access to news from hundreds of sites
India’s vulnerability in the global economic tumult
There is no alternative to timely policy responses, heeding sound economic advice, and strengthening institutions 
India's forex reserves fall $1.774 billion to $595.954 billion
MUMBAI: India's forex reserves declined by $1.774 billion to $595.954 billion for the week ended May 6 on the back…
Get all your news in one place