USD vs INR: Rupee hits record low of 95.85 against US dollar, Why is it falling?

USD vs INR: The Indian rupee weakened to a record low against the US dollar on Thursday. The domestic currency slipped 14 paise to 95.85 per dollar in early trade, compared to its previous close.

The fall in the rupee came as global pressures continued to weigh on emerging market currencies. A firm US dollar, elevated crude oil prices, and cautious risk sentiment kept traders on edge.

Why rupee is falling?

One big reason is the strength of the US dollar. The dollar has been gaining value against many currencies around the world including the rupee. When the dollar gets stronger the rupee tends to get weaker.

Rising crude oil prices are also hurting the rupee. India buys most of its crude oil from other countries. When oil prices rise, India has to spend more dollars on imports. This increases demand for the US dollar.

Imports of gold, silver, fertilizers, and metals have also become expensive. Global supply issues and higher prices have increased India’s import bill.

Foreign investors are also pulling money out of Indian markets. They are selling Indian shares and bonds and taking money back in dollars. This is adding more pressure on the rupee.

Expert view

Amit Pabari, MD of CR Forex Advisors, said the rupee may get support near the 94.50–94.80 levels, while 95.80–96.00 could act as a strong hurdle.

He said the 96 level is important for the market sentiment. The rupee may not weaken much beyond this level unless fresh global worries increase demand for the US dollar.