On Wednesday, the Indian rupee closed at an all-time low of Rs. 79.04 against the US dollar. So far in 2022, INR has lost 6.39% against USD, including a 1.97% fall in June alone.
Reason 1
In 2022, foreign investors have sold Rs. 1.81 lakh crore worth of equities. A net outflow of foreign capital means a depreciating rupee, which leads to a further decrease in investments.
Reason 2
Increasing crude oil prices mean an increase in demand for the US dollar. This, in turn, reduces the purchasing power of the rupee.
Reason 3
The USD has been increasing in strength, which means a corresponding depreciation in the value of the Indian rupee. A weakened rupee increases import prices, which in turn weakens it further.
Reason 4
An increase in interest rate by the US leads to an increase in return on dollar investments. This leads to foreign capital outflow. As money flows out of India, INR weakens against USD.