![]() ![]() ![]() This reduces the purchasing power of our currency. Or when money is in greater supply in the economy, but we cannot get what we want. Prices rise when there are not enough goods, leading to a demand-supply gap. Then, we all complain about the price rise. Also, the strengthening of the Dollar in line with expectations of better growth in the US economy has pressured the Rupee. This time they are doing it because of the global uncertainties caused by Ukraine's invasion by Russia. The Rupee also falls when foreign portfolio investors pull out money from the stock and bond markets. Stringent lockdowns across various Chinese cities have badly affected economic activity there. After the US, China is our biggest trade partner. And India is hit hard as it’s the world's third-largest oil consumer behind the US and China.īut there are also other factors that weaken the Rupee. Naturally, supplies have been disrupted and prices spiked. Russia is the world's second-biggest crude oil exporter. The Ukraine war is a significant factor in the Rupee’s decline. This is how the superiority got established, and the gap kept widening. We need to buy more dollars from banks that represent a small unit in the vast foreign exchange market. The dollars we get from the US are less than what we need to pay them for their goods. Our imports from the US are more than what we export there. When a commodity’s demand is high, its value will be more. This leads us to two more questions: Why has the US Dollar always been stronger than the Rupee-just rewind to the time when you started following the news-and why has the gap been widening? THE WIDENING GAP ![]()
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