Rupee at Record Low: The Indian currency Rupee has once again reached its record all-time low. During trading on Wednesday (February 5), it fell by 25 paise to 87.37 against the US dollar. This is the lowest level of rupee. Earlier on Monday, it had fallen by 67 paise to the level of 87.29.

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Rupee at Record Low: Reason Behind Rupee Fall

- Trade deficit: When a country’s imports are more than its exports, then there is a situation of trade deficit. India’s trade deficit stood at $37.8 billion (about Rs 3.31 lakh crore) in November and $21.94 billion (about Rs 1.92 lakh crore) in December. This reduces the demand for rupee and its price falls.
- Current account deficit: The current account deficit is the difference between trade deficit and import-export of services. If it increases then it may reduce the demand for rupee. In the last financial year, it was 0.7% of GDP. It is estimated to be 1% in financial year 2025.
- Foreign Exchange Reserves: A decline in foreign exchange reserves may reduce the demand and value of the rupee. According to the data till January 24, India’s forex has increased by $ 1.8 billion to $ 629.55 billion (about Rs 55.02 lakh crore) compared to the previous week.
- Inflation: A high inflation rate can devalue the rupee, as it reduces the purchasing power of the rupee. However, it stood at 5.22% in December. The inflation rate in November was 5.38%. But this is 4 percentage points more than RBI’s expectation of 2%
- Interest Rate: If RBI increases interest rates, it can increase the demand for rupee and increase its price. But if interest rates go down, it could reduce demand and drop the price. RBI can cut interest rates in the policy meeting.
US President Trump’s Stance Regarding Tariffs
US President Trump’s stance regarding tariffs On February 1, US President Donald Trump announced a 25% tariff on Canada and Mexico and an additional 10% tariff on China. Later he withdrew his decision, due to which the rupee became stable yesterday.
Trump has several times threatened to impose 100% tariffs on BRICS countries. India, Brazil, and China are part of all three BRICS. Apart from this, Trump has complained about India imposing excessive tariffs on American products. In such a situation, there was a threat of tariff on India also.
Rupee at Record Low: Imported Goods to Cost More
A fall in the rupee means that the import of goods is going to become expensive for India. Apart from this, traveling and studying abroad has also become expensive. Suppose, when the value of the rupee was 50 against the dollar, Indian students in America could get 1 dollar for 50 rupees. Now for 1 dollar students will have to spend 86.31 rupees. Due to this, everything from fees to accommodation, food, and other things will become expensive.

Jay Chavda He is the Founder and Writer of businesspulsecare.com. He is an I.T Engineer, Freelancer, Businessman. He posts Business, Stock/Share Market, Finance Related News and updates on the website. 🔗