Rupee hits record all-time low: Price of 1 dollar becomes 95.50 rupees, due to which there is a danger of inflation increasing.

Geopolitical Tension: Tension has increased in the Gulf countries after US President Donald Trump termed the ceasefire with Iran as weak. Due to fear of war or conflict, investors are withdrawing their money from emerging markets (like India) and running towards safe investments.

Rise in crude oil prices: There is a fear of supply disruption in the global market due to the Iran crisis. For this reason, the prices of Brent crude oil have crossed $ 105 per barrel. India imports about 80% of its oil needs, which increases demand for the dollar when oil becomes expensive and the rupee weakens.

Increasing trade deficit: When crude oil prices increase, India’s import bill also increases. This is likely to increase the country’s ‘Current Account Deficit’ (CAD), which directly reduces the value of the rupee.

Dollar strength: In an environment of global uncertainty, the US dollar is considered the safest asset i.e. safe haven. After Trump’s tough stance, the demand for dollars has increased in markets around the world, due to which other currencies including the rupee are under pressure.

Withdrawal of foreign investors: As global risks increase, foreign portfolio investors withdraw their investments from the Indian stock market and move them back into dollars. The value of rupee falls due to dollar leaving the market.

Dollar expensive, danger of rising inflation in India

The Middle East conflict is being considered as the most serious energy crisis in decades, which is directly impacting India.

oil prices: India’s import bill has increased due to expensive crude oil.

Essential goods expensive: Supply of LPG, plastic and other petrochemical products affected.

Fear of inflation: Due to the dollar becoming expensive, petrol, diesel and imported goods will become expensive, due to which retail inflation may increase.

Studying and traveling abroad is expensive: Now you will have to spend more money to buy dollars for going abroad or for studies.

Electronics Expensive: Mobiles, laptops and imported parts can be expensive, as payment is in dollars.

Oil production at lowest level in last two decades

According to a Reuters survey, oil production of OPEC countries in April was at the lowest level in the last two decades. Saudi Aramco CEO Amin Nasser has warned that it may take until 2027 for the market to stabilize due to disruptions in oil exports from the Strait of Hormuz. Due to this, about 10 crore barrels of oil is being lost every week.

Investment bank JP Morgan has said in its report that even if the Strait of Hormuz opens next month, oil prices will remain around $100 this year. It has been said in the report that even after the opening of the road, it will take time for the supply to become normal due to lack of logistics and tankers.

Impact on India: PM Modi appeals for restraint

India imports 85% of its oil needs, so rising crude oil prices are a matter of concern for the country. Prime Minister Narendra Modi has also appealed to citizens to exercise restraint in fuel consumption and purchase of gold so that the pressure on the economy can be reduced. Traders believe that further decline in rupee may be seen in the coming time.

How is the value of currency determined?

• If the value of a currency decreases against the dollar, it is called currency depreciation.
• Every country has foreign currency reserves, through which international transactions take place. Its increase and decrease affects the currency.
• If there are enough dollars in India’s foreign reserves, the rupee will remain stable. If the dollar decreases, the rupee will weaken; if it increases, it will become strong.

Read this news also…

Government said – There is no shortage of petrol, diesel and LPG: A day ago, PM Modi had said – reduce their use.

Amid the ongoing crisis in West Asia, the government has rejected reports of fuel shortage in the country. The government on Monday assured citizens that there is no shortage of petrol, diesel or LPG in the country.

This statement comes a day after Prime Minister Narendra Modi on Sunday appealed to reduce fuel dependence and save money. Read the full news…

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