Rupee touches historic low, impact on Indian economy

Published: Tuesday, December 13, 2011, 16:48 [IST]

The Rupee value tumbled as much as 58 paise to 53.43 per Dollar on Tuesday. This situation is due to lingering eurozone debt worries and withdrawal of Foreign Institutional Investments (FIIs) from the market. Weak Indian Industrial Production (IIP) numbers is also one of the important factor behind the devaluation of the rupee.

The financial turmoil in euro zone is forcing investors to seek safe haven in dollar. Investors are turning more and more risk averse on the backdrop of falling equities and commodities. Indian rupee has depreciated more than 5% against Dollar in the previous month and 17.4% in this fiscal year. So far, the Indian Rupee is Asia's worst performing currency this year.

Continuous demand of dollar from Banks and Importers is further depreciating rupee against the greenback. The falling rupee has put more pressure on the oil bill which has been widened up, despite falling international crude prices. High oil import bill will further widen the gap between the imports and exports and thus raising trade deficit.

Euro zone crisis is also affecting Indian markets, if this issue is not resolved we can expect further fall of rupee, with dollar strengthening against Euro.

GoodReturns.in

Story first published: Tuesday, December 13, 2011, 16:48 [IST]

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