dollar The performance of rupee has been poor this year compared to Rs. The rupee has weakened by three percent against the US dollar in 2024. The rupee has been affected due to the slowdown in the economy and strengthening of the dollar in global markets. The rupee fell to its new all-time low at the end of 2024. As of December 27, the rupee has fallen by three percent as compared to the level of 83.19 per dollar on January 1 this year. On December 27, the rupee was at a low of 85.59 per dollar. In such a situation, it is expected that the position of the rupee will be somewhat better in 2025. The improvement in the dollar has had an impact on the currencies of emerging markets. The rupee’s exchange rate against major currencies continued to be impacted in an eventful 2024. However, compared to other currencies of the world, the fluctuations in the Indian rupee have been much less.
Due to this the rupee became weak
The Russia-Ukraine war and the crisis in West Asia along with disruptions in trade through the Red Sea along with elections in several countries across the world weighed on the rupee sentiment. Steps taken by the world’s major central banks and other global factors have not only affected the rupee-dollar level but also impacted the exchange rates of currencies across all emerging economies. In fact, the decline in the rupee against the dollar has been less compared to other currencies. The rupee has been in gains against the euro and the Japanese yen. Shaktikanta Das, the then governor of the Reserve Bank of India (RBI), had said in December’s bi-monthly monetary policy review that the Indian rupee had less volatility than emerging market currencies.
Rupee fell rapidly in last two months
In the last two months, there has been a record decline of two rupees in the Indian currency against the dollar. On October 10, the rupee crossed the important level of 84 per dollar. On December 19, it further weakened to a low of 85 percent to the dollar. The rupee fell to its all-time low of 85.80 per dollar during daytime trading on December 27. That day the rupee saw its biggest single-day fall in two years. However, when compared with other global currencies except the dollar, the rupee has strengthened by 8.7 percent against the yen. It increased from Rs 58.99 per 100 yen on January 1 to Rs 54.26 per 100 yen on December 27. Similarly, the rupee has improved by five percent against the euro since August 27. It was Rs 93.75 per euro on August 27, which became Rs 89.11 per euro on December 27.
RBI is engaged in strengthening the rupee
However, despite this the central bank is making more active efforts to stabilize the rupee-dollar rate. Demand for US dollars has increased due to India’s dependence on crude oil imports and increasing trade deficit. Naveen Mathur, director – commodities and currencies, Anand Rathi Shares & Stock Brokers, said the RBI has actively intervened to stop the sharp fall in the rupee. This is also known from the figures of foreign exchange reserves. Foreign exchange reserves have declined from a record high of US $ 704.89 billion at the end of September to $ 644.39 billion by December 20, 2024, which is its lowest level in almost six months. Foreign currency assets also include the impact of appreciation or depreciation of non-US currencies such as the euro, pound and yen held in foreign exchange reserves.
Effect of slowdown in China’s economy also
India’s external challenges have intensified as China’s gross domestic product (GDP) growth has slowed to 4.8 per cent, reducing demand for Indian exports. Apart from this, tensions in West Asia and disruption in supply chains due to the Red Sea crisis have affected the trade balance of many countries, including India.
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