NEW DELHI (CoinChapter.com) — The Indian rupee was trading at around 79.50 against the dollar this July 21, a week after falling to its lowest record level of 80.2. The continuous outflow of foreign portfolio investment, rising trade deficit, and rising crude oil prices have kept the rupee under pressure for a while now.
On July 18th, Finance minister Nirmala Sitharaman stated in Parliament that the value of the Indian currency has fallen by Rs 16.08 (25.39 percent) against the dollar in the past 8 years.
She cited the Reserve Bank of India (RBI), saying the exchange rate was Rs 63.33 to a dollar in 2014. But by July 11, 2022, the currency had depreciated and declined to Rs 79.41 per dollar.
Why is Indian Rupee falling?
Capital outflows have been a major concern for the Indian rupee. The data from the capital market revealed that foreign investors sold shares worth Rs 1,650 crore.
Sitharaman also confirmed that the withdrawal of foreign portfolio investors worth $14 billion from Indian equity markets in 2022-23 is the major reason for the depreciation in the Indian currency.
Foreign investors have pulled a record $29 billion from Indian assets this year, surpassing the country’s total foreign fund inflows over the previous two years.
India’s merchandise trade deficit rose to an all-time high of $26.18 billion in June. However, the trade deficit was recorded at $24.3 billion in May. This high trade deficit also increased pressure on the domestic market.
