RBI is issuing dollars in the market to support the rupee, but this has not prevented the decline of the Indian currency. It has also led to a decline in the country’s foreign exchange reserves in September. The country imports about 85 per cent of its crude oil requirement.
Crude oil The price continues to rise. According to Bloomberg’s report, benchmark West Texas Intermediate crude rose above $ 91 a barrel on Monday after rising 29 per cent in the July-September quarter, Which is the biggest third-quarter lead in nearly two decades. Benchmark Brent crude is already hovering around $ 95 a barrel. The impact of the rise in crude oil prices internationally has been seen in the October-December quarter. India’s current account deficit ( CAD ) has increased and the possibility of further pressure on the rupee in the coming times.
India imports about 85% of the requirement
The country imports about 85 per cent of its crude oil requirement and any increase in global prices increases import spending. Since buying crude oil has to be paid in large dollars, the rupee is weaker than the US currency. The Indian currency has come down to Rs 83 against the US dollar due to rising dollar demand due to rising crude oil prices in the international market.
The current account deficit increased
According to RBI data released last week, India’s current account deficit ( CAD ) increased sevenfold to $ 9.2 billion in the April-June quarter, Whereas in the earlier quarter, the figure was $ 1.3 billion. The steady rise in oil prices and the decline in demand in global markets have led to a decrease in exports which is likely to increase further. Cad was 1.1 per cent of GDP for the April-June quarter of the financial year 2023-24. According to MK Global Financial Services chief economist Madhavi Arora, due to high oil prices, high core imports and export of services and recession in the July-September quarter “A substantial expansion of CAD “will increase to 2.4 per cent of GDP. Later, a lot will depend on oil prices in global markets.
Indian rupee decline is not stopping
RBI is issuing dollars in the market to support the rupee, but this has not prevented the decline of the Indian currency. It has also led to a decline in the country’s foreign exchange reserves in September. Data released on Friday by the RBI shows that India’s foreign exchange reserves fell for the third consecutive week to a four-month low of $ 590.7 billion by 22 September. Foreign exchange reserves have declined by $ 8.2 billion in three weeks. The decline in foreign exchange reserves is a cause for concern as RBI has less scope to prevent volatility in the rupee through its market intervention.
