The fall was triggered by the financial crises in Turkey, which led to a strong demand for US dollars. The sharp drop of the Turkish lira impacted many emerging economies and Indian currency was affected the worst. The strong demand for American dollars was much more than the supply of Indian rupees which lead to this historic downfall in the value of Indian currency.
Experts fear that the current situation is likely to continue for some days to come as the lira crises will escalate even more, impacting the dollar-rupee exchange rates extensively. Apart from the Turkish lira meltdown, the widening trade deficits along with the current account deficit are putting a strong strain on the Indian rupee.
However, the fall in the value of the rupee is not sudden. It slipped steadily this year around 9% from 63.67 per dollar to 70.25 per dollar today thanks to the surge in global crude oil prices.
In fact, India’s trade deficit touched an all-time high of $18.02 billion this July as a result of a high oil import bill. India is worst hit out of all Asian markets mostly because of its wide current account deficit, due to the disparity between imports and exports.
According to thelogicalindian.com, the Indian Government blames ‘external factors’ for the sharp fall, saying there is ‘nothing to worry about’. However, the fact is that the rising value of the dollar has huge implications on the microeconomics of everyday India.
