Dollar Vs Rupee: On Thursday, the Indian rupee closed at 84.46 per dollar, down 7 paise against the dollar, and set a new record. This decline was due to the continuous withdrawal of foreign funds and the strength of the US dollar.

Let us understand here, what is the main reason for the strength of the dollar?

The impact of US economic policy

• Continuously rising inflation and strong economic data in America are strengthening the dollar.
• The possibility of further increases in interest rates by the Federal Reserve is also strengthening the dollar.

Impact of the Dollar Index

The dollar index, which measures the dollar's position against major currencies, rose to 106.80. This makes the dollar a safe option among investors.

Selling by foreign investors increased the pressure

Foreign institutional investors (FIIs) sold shares worth Rs 1,849.87 crore on Thursday. This selling is hurting both the domestic stock market and the rupee.

Internal factors of the Indian economy

Rise in inflation

• Retail inflation in India reached 6.21% and wholesale inflation was 2.36% in October.
• The rise in prices of food items and vegetables is putting additional pressure on the rupee.

Impact on imports

India has to spend more dollars to import crude oil and other commodities, which is reducing the demand for the rupee.

RBI intervention

The Reserve Bank is selling dollars in the market to keep the rupee stable. Although this intervention can slow down the pace of decline, it does not seem to be enough to handle the rupee.

Will the fall of the rupee stop?

Experts believe that if the situation does not improve, the rupee may soon fall to the level of 85 per dollar. However, RBI's intervention and improvement in global market conditions may provide relief.