The Indian rupee has plummeted to fresh all-time lows over the last several days as emerging market assets are battered by a global risk-off, which has triggered a flight to safe-haven assets. Meanwhile, foreign money continues to leave Indian assets even as the trade deficit worsens. The rupee’s fall these days, experts say, is primarily because of high crude oil prices, a strong dollar overseas, and foreign capital outflows.
Yet, the rupee has performed better, compared with several of its Asian peers and the Reserve Bank of India (RBI) is committed and well prepared to contain the volatility in the exchange rate.
In summary, the backdrop of heated inflation, Covid crisis, monetary tightening by key central banks, and supply chain disruptions sparked by the Russia-Ukraine war have slowed down global economic activity, leading to the rupee’s massive drop against the dollar.
The rupee lost more than 6 per cent this calendar year and ranks among the worst-performing Asian currencies. It hit a new lifetime low at 79.12 a dollar on Friday.
Computer hardware, steel, fertiliser, and coal importers face a possible downgrade, while companies from sectors such as pharma, paper, tea and textile firms may benefit from an upgrade, said, chief rating officers. Even the outlook can be revised.
