Mumbai3 days ago
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The rupee came on its record all time low today i.e. 3 February. It saw a decline of 67 paise against the US dollar and has reached the lowest level of Rs 87.29 per dollar.
According to experts, the reason for this decline in the rupee is to impose Trump’s tariffs on Canada, Mexico and China, which Forex Traders has described as the first step of the global trade war. Apart from this, the reason has also had a negative effect on the rupee political tension.
On February 1, the US President announced to impose extra tariffs in three countries.
US President Donald Trump announced 25% on Canada and Mexico on 1 February and Extra 10 tariffs on China. However, he did not name India during this period. Earlier, he threatened to impose high tariffs on countries like India, China and Brazil at an event in Florida.
Trump has several times threatened to impose 100% tariffs on BRICS countries. India, Brazil and China are part of all three BRICS. Apart from this, Trump has complained to India about putting a lot of tariffs on American products. In such a situation, there was a threat of tariff on India.
It will be expensive to import
The decline in the rupee means that the import of things is expensive for India. Apart from this, walking and reading abroad has also become expensive. Suppose when the value of the rupee was 50 against the dollar, then Indian students in America used to get 1 dollar for 50 rupees. Now students will have to spend Rs 86.31 for 1 dollar. This will make fees to stay and food and other things expensive.
How is the price of currency fixed?
If the value of any other currency decreases compared to the dollar, it is called falling, breaking, weak. Currency deputy in English. Every country has a foreign currency reserve, from which it does international transactions. The effect of decreasing and increasing foreign reserve is seen at the price of currency.
If the dollar in India’s foreign reserve is equal to the reserves of America’s money, then the price of the rupee will be stable. If we have dollars, the rupee will be weak, if we increase, the rupee will be strong. This is called floating rate system.
