By Devraj Bollareddy

On Tuesday, the rupee plunged to an all-time low, coming in at 78.5 rupees against one dollar. The fear of a global recession, the strengthening dollar, and a foreign fund outflow from the country has kept the rupee under pressure for a while now.

This year alone foreign investors pulled out Rs 2.13 lakh crores from India with a staggering Rs 46,000 crores being pulled out this month itself. This was more than the money that they have invested in 12 years between 2009 and 2021. This could have been attributed to the fall in the exchange rate.

Another reason could also be the fact that crude oil prices experienced a small hike and further sanctions being imposed on Russia are all contributing factors to the Rupee’s fall.

The future for the Indian currency looks pretty bleak right now, further economic sanctions on Russia may drive fuel prices even higher and put high amounts of pressure on emerging market’s currencies. Experts predict the Rupee to fall even further to 78.80 against the dollar as foreign investment is pulled out from Indian markets.

As the Rupee keeps devaluating, the effects of this will be felt across all industries. Some companies even created contingency plans to sustain even further 10-15% devaluation on top of the current value of the rupee.

Companies that rely heavily on exports from developed countries or rely on US dollar debt to fund operations will take the hardest hit because of the devaluation. Exporters could benefit from the fall in prices, which would in turn make their offerings more price-competitive in the global market. However, weak global demand and rising inflation make this an unlikely possibility.

On the bright side though, India is not the only country facing this problem. Many Central European and Asian countries have also seen volatility in their currencies.

Also Read: Union Budget 2022: RBI To Introduce Digital Rupee From April