The Indian rupee hit a record low against the U.S. dollar on Monday as the greenback strengthened against most global currencies. Some analysts say the rupee is headed all the way to 60 if the current trend persists.
Here are the few reasons for that:
Gold prices: Kishore Narne of Motilal Oswal Securities told NDTV Profit a weakening rupee is supportive for gold. That's because global commodities such as gold and silver are priced in dollars. Gold prices, which are down nearly 15 per cent (in rupee terms) in 2013, may trade in a range, Mr Narne said.
Petrol, diesel prices: Crude is the biggest component of India's import bill. A weak rupee is bad for the economy since oil companies, which pay for crude in dollars, will have to shell our more money for importing oil. This will increase India's current account deficit.
The rupee weakness means there is little likelihood of a respite from high fuel prices, but because global commodity prices have been falling, there's no imminent threat of a price hike either.The rupee weakness is a bad news for students going to study abroad as they will have to shell out more towards their fee and living expenses. Similarly, Indian tourists going abroad will have fewer dollars to spend because of the rupee weakness.
Exporters such as IT firms, which earn a majority of revenues in dollars, will gain from the rupee weakness. Companies like Infosys get over 75 per cent of their business from North America and Europe so a weak currency is beneficial for them.
The rupee weakness is bad news for investors, especially foreign funds. A weak rupee also dents corporate profits (especially for companies that import raw materials) and makes it expensive to borrow from abroad.
Here are the few reasons for that:
Gold prices: Kishore Narne of Motilal Oswal Securities told NDTV Profit a weakening rupee is supportive for gold. That's because global commodities such as gold and silver are priced in dollars. Gold prices, which are down nearly 15 per cent (in rupee terms) in 2013, may trade in a range, Mr Narne said.
Petrol, diesel prices: Crude is the biggest component of India's import bill. A weak rupee is bad for the economy since oil companies, which pay for crude in dollars, will have to shell our more money for importing oil. This will increase India's current account deficit.
The rupee weakness means there is little likelihood of a respite from high fuel prices, but because global commodity prices have been falling, there's no imminent threat of a price hike either.The rupee weakness is a bad news for students going to study abroad as they will have to shell out more towards their fee and living expenses. Similarly, Indian tourists going abroad will have fewer dollars to spend because of the rupee weakness.
Exporters such as IT firms, which earn a majority of revenues in dollars, will gain from the rupee weakness. Companies like Infosys get over 75 per cent of their business from North America and Europe so a weak currency is beneficial for them.
The rupee weakness is bad news for investors, especially foreign funds. A weak rupee also dents corporate profits (especially for companies that import raw materials) and makes it expensive to borrow from abroad.
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