The Indian Rupee has dived a record low of 77.02 against a US dollar on Monday, and as per a poll conducted by Economic Times, it is further expected to plunge around 80 in the next few days. This record decrease in Rupee’s value is a consequence of the crude oil hike in the global market due to the Russia-Ukraine conflict.
The crude oil price mounted around $139 per barrel, and it is the highest hike in the crude oil price since 2008. It will increase the pressure on Indian currency as India’s trade and economic deficits will witness a rise. The experts say the situation may worsen until a solid diplomatic solution is not found to tackle the Russia-Ukraine war.
“The way the situation has emerged over the last one month, it will not easily cool off,” said Amit Pabari, managing director, CR Forex.
Moreover, fuel prices are all set to witness a hike by 6 rupees as the state election polls have ended, and the crude oil is now costing extra bucks in the global market. The state governed oil retailers will increase the fuel price by 5 to 6 rupees per litre to maintain the adverse impact of crude price oil in the international market.
The increasing crude oil prices globally can lead to a considerable surge in India’s import bills as India’s cross-border shipments cover three-fourths of its motor-fuel consumption.
Founder of IFA Global, Abhishek Goenka, said, “Even if the rupee drops in the shorter term due to geopolitical risks, rising crude and fund outflows, it is going to revert to the average five-year mean, which is at about 2.5%“.
Overall, the hike in crude oil price, the plunging value of the Indian Rupee against the US dollar, and the expected increase in fuel price in India are the consequences of the Russia-Ukraine conflict. Therefore, India’s top leadership is continuously interacting with the government of both countries to settle down their issues peacefully.