Rupee At All-Time Low: Rupee is witnessing a historic decline and in the session of 17 December, the value of Rupee against one dollar has come down to the level of Rs 84.93 for the first time, which was closed at Rs 84.87 in the last session. Rupee has weakened by six paise in today's session. After the continued weakness of Rupee against the dollar, it is now being feared that the Indian currency can also break the level of Rs 85 against the dollar. 

Why did the rupee fall?

On Monday, 16 December 2024, the Ministry of Commerce has released trade data regarding export-import. And according to this data, India's trade deficit has come down to an all-time low in the month of November. The trade deficit in November 2024 has been $37.84 billion, breaking all previous records. Due to the sharp rise in imports this month, the trade deficit has increased, while on the other hand, exports have also declined. 

A record jump in gold imports was seen in the month of November. Due to weddings and festive demand, India imported gold worth $14.8 billion in the month of November. Apart from this, imports of edible oil, fertilizer and silver have also increased, which has increased the trade deficit and the rupee is bearing the brunt of it.  

How much more will the rupee fall? 

Donald Trump will be sworn in as the US President on January 20, 2025. Since his victory in the election, the rupee has been falling against the dollar. The dollar index has strengthened since Trump's victory and the dollar is likely to strengthen further after coming to power. The Trump government may impose heavy tariffs on foreign goods coming to the US, which will make buying imported goods expensive. There is a risk of inflation rising due to this. In such a situation, if the possibility of reduction in interest rates decreases, the dollar may strengthen further. This can lead to further weakness in the rupee.  

Heavy drop in foreign exchange reserves 

To stop the weakness in the rupee, the Reserve Bank of India has been continuously selling dollars so that the rupee can be controlled. Since the week ending on 27 September 2024, the foreign exchange reserves of RBI have declined by about 50 billion dollars. The major reason for this is the selling by foreign investors in the Indian stock market in the month of October-November, while the second major reason includes the dollar sold by the RBI to stop the rupee.