Couple of weeks ago, Rahul Gandhi was tweeting on a daily basis that India’s rupee has weakened against the US dollars. The desperate Congress party went on to the extent of even trending about depreciation in India’s Rupee value on social media platforms.
But now the rupee is getting stronger and has astonished everyone by posing the biggest single day gain in the past 5 years. Yes, the Indian rupee posted 101 paise or 1.36% on November 2nd and ended the day at Rs 72.45 a dollar. The previous closing price was Rs 73.45.
It was a known fact–but Congress party never wanted Indians to know— that the price of oil in United States rose to $ 70 a barrel and this was for the first time since November 2014. This increase in crude oil price was the main reason for the value of rupee depreciation as India imports nearly 80 percent of the oil it consumes.
Speaking on this, Madhavi Arora, economist, FX and rates- Edelweiss Securities Ltd said “A confluence of factors helped the sharp uptick in rupee today (November 2nd). Falling crude prices, better global risk appetite on U.S.-China trade-related hopes and broad dollar weakness helped the currency. This is the biggest single day gain for the rupee since early September of 2013”.
Explaining how the Indian rupee strengthened, an analyst explained “Broad-based weakness in dollar along with fall in crude oil prices boosted the Indian rupee, which climbed 1.40 per cent to 72.44. Local currency had a single biggest day gain in five years amid improvement in macro environment. Foreign funds have turned buyer in domestic equity and debt market”.
But one thing we need to know that if the rupee value is week, it benefits the exporters in a way as they get more money. Economic Affairs Secretary Subhash Chandra Garg had recently said “the rupee at 64 to a dollar had hurt exports and was not justified by the real exchange rates”. He added “My sense is that there is stability now and this level of about 66-67 (to a dollar) should be the level that should prevail for some time.
Source: The Hindu