Indian Rupee will be weaker against Dollar, Government data has given these alarming signs

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Indian Rupee will be weaker against Dollar, Government data has given these alarming signs


Photo:FILE Indian Rupee will be weaker against Dollar

Rupee vs Dollar: Concerns have arisen about its impact on the broader economy after the trade deficit widened due to a steady increase in imports, with exports from India declining marginally in August. in this calendar year US Dollar (USD) The rupee has already depreciated up to seven per cent against this and it is likely to remain under pressure. In such a situation, experts and analysts believe that it will lead to inflation and macroeconomic instability.

decline after 20 months

According to government data released on Saturday, the country’s exports in August declined 1.15 per cent to $33 billion for the first time in 20 months, while the country’s imports rose 37 percent to $61.68 billion from a year ago. With this, the trade deficit has more than doubled to $ 28.68 billion. In the first five months (April to August) of the current fiscal, total exports stood at $192.6 billion and imports at $317.8 billion, taking the total trade deficit to a record $125.2 billion.

This is two and a half times higher than the same period last year when the trade deficit stood at $53.8 billion. Analysts expect India’s trade deficit to touch $250 billion by March 2023 if the current trend continues in the current fiscal. In 2021-22 it was $ 192.4 billion. Federation of Indian Export Organizations (FIEO) director general Ajay Sahai said the trade deficit could widen to $230-240 billion this year.

direct impact on Rs.

The widening trade deficit has a direct impact on the current account deficit (CAD) and affects the belligerence of the Indian rupee, investor sentiments and macroeconomic stability. The CAD is expected to reach three per cent of GDP or $105 billion in the current fiscal. The deteriorating import-export balance is due to the rise in global oil and commodity prices due to the Russia-Ukraine war, supply chain disruptions due to Kovid restrictions in China and increased demand for imports. Another reason for this is the windfall tax imposed on export of diesel and aircraft fuel from July 1.

The decline in the country’s exports comes at a time when the oil import bill is increasing. India has spent around $99 billion on oil imports between April and August, which is much higher than the $62 billion spent in the same period of 2020-21. The government has taken a number of steps in recent months to discourage imports, such as raising import duties on commodities like gold, banning imports of many items and making efforts to increase the share of ethanol blended fuels in domestic use. These measures have yielded some gains and some moderation in the import bill, but a major change in the broader trend is unlikely.

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