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Indian Rupee Hits Weakest Level Ever Against U.S. Dollar

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The Indian rupee touched the weakest level on record against the dollar on Tuesday, one other victim of upper energy prices and a stronger greenback.

The rupee has lost about 7 percent of its value against the dollar this yr as India has spent more to import sources of energy like crude oil, natural gas and coal. Prices of those commodities have climbed after Russia invaded Ukraine.

One other factor behind the decline of the rupee is uncertainty concerning the global economy that has, in turn, propelled the dollar to a 20-year high against the currencies of its major trading partners. Investors have pulled money out of India and other developing countries and poured it in to america, where the Federal Reserve is raising rates of interest aggressively to tame inflation.

“A variety of it’s dollar strength reasonably than rupee weakness,” said Rahul Bajoria, the chief economist for India at Barclays. “It still seems like on a relative basis the rupee has done so much higher,” he said, pointing to the steeper declines in the worth of the euro and the British pound against the dollar.

On Tuesday, the rupee briefly crossed 80 to the dollar for the primary time. The Reserve Bank of India intervened out there, because it has in recent months, to bid up the currency, based on local media reports.

Like in much of the world, inflation has slowed economic growth this yr in India. Reserve Bank officials responded by unexpectedly raising rates in May, and on the other hand in June, to 4.9 percent. But inflation stays around 7 percent, putting pressure on household budgets.

Prime Minister Narendra Modi’s government has cut taxes on fuel and restricted exports of wheat and sugar. And it has bought more Russian oil, which has turn into cheaper following sanctions imposed by america and Europe.

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