Indian Rupee Hits All-Time Low: Dollar Weakens by 9 Paisa to 83.53; Imports to Get Costlier
Today, on April 16, the Indian rupee hit a record all-time low against the US dollar, witnessing a decrease of 9 paise, reaching 83.53 rupees per dollar, its lowest level yet. Previously, on March 22, 2024, the rupee had touched its lowest point against the dollar at 83.45.
Experts attribute the strengthening of the US dollar to escalating tensions between Israel and Iran. Additionally, the rise in crude oil prices has also contributed to the dollar’s strength.
Impact of Rupee Depreciation: Costlier Imports
The decrease in the value of the rupee implies that importing goods will become more expensive for India. Furthermore, foreign travel and education expenses have also become pricier.
To illustrate, when the exchange rate was 50 rupees to the dollar, Indian students could get 1 dollar for 50 rupees in the US. Now, students will have to spend 83.53 rupees for 1 dollar. Consequently, expenses such as tuition fees, meals, and other items will become costlier.
How Currency Value is Determined
Currency value is determined through its exchange rate. When the value of a currency, such as the dollar, decreases in its exchange rate against another currency, it is said to depreciate. Each country holds foreign currency reserves, which they use for international transactions. Fluctuations in these reserves impact the value of the currency.
If India’s foreign reserves in dollars equal the US’s reserves in rupees, the value of the rupee remains stable. If the dollar depreciates, the rupee weakens, and if the dollar strengthens, the rupee strengthens. This system is known as a floating exchange rate.
