The news of the Indian rupee sliding down has been rattling Indians for a day now. On Tuesday, as the market opened, the Indian rupee glided down to an all time low of 70.10 in the intra-day trading against one US dollar. This is the lowest fall recorded in intra day trading in the last five years. The silver lining, however, is that it closed at 69.90 unlike Monday when it closed at 69.93. While that is no reason to rejoice, but the Government wants you to believe that there is nothing to worry about.
The fall in Indian rupee comes after the rise in prices of crude oil, a trade deficit that keeps on widening and after foreign investors have exited from India. All these factors, among others led to the fall in the value of the Indian rupee. The fall in the rupee, however, makes it difficult for the Reserve Bank of India to keep currency values in check. This results in higher costs of imports, but cheaper exports.
The Economic Affairs Secretary of the finance department maintains that even though this is a pretty serious situation, it is caused by external actors. When these factors change, the economic condition of the country is going to improve too. SBI Chairman Rajnish Kumar seems to back up a similar theory. He pointed that the Indian currency might have fallen down against the US dollar, but it has not fallen down much against other currencies. In fact, he is of the opinion that the rupee would settle somewhere between 68 to 70 and this would encourage further foreign investment in various forms.
The current scenario between US and Turkey where the US is controlling its economic and political issues through higher tariffs and an import ban are also the major reasons for many nations getting affected, including India. That is why analysts and experts are not able to predict when exactly the financial conditions will be back to normal. Until things get back to normal, the economic situation in the country and worldwide is going to be volatile, as experts have predicted. Needless to say, this is going to be interesting to watch how the market performs in this period.