INTEGRATED MAINS AND PRELIMS MENTORSHIP (IMPM) 2025 Daily KEY
|
Exclusive for Subscribers Daily: Topics like Rupee-Dollar Exchange rate, Citizenship Act, 1955 for the UPSC Exam? Why are topics like Glacial lake outburst floods (GLOFs) and asteroids, Ethanol Blending important for both preliminary and main exams? Discover more insights in the UPSC Exam Notes for February 04, 2025 |
🚨 UPSC EXAM NOTES presents the February edition of our comprehensive monthly guide. Access it to enhance your preparation. We value your input - share your thoughts and recommendations in the comments section or via email at Support@upscexamnotes.com 🚨
Critical Topics and Their Significance for the UPSC CSE Examination on February 04 20205
Daily Insights and Initiatives for UPSC Exam Notes: Comprehensive explanations and high-quality material provided regularly for students
Amid global meltdown, rupee breaches 87 against the dollar
For Preliminary Examination: Current events of national and international importance
For Mains Examination: GS III - Economy
Context:
The Indian rupee slumped almost 0.6% or 49 paise to breach the 87 mark against the U.S. dollar on Monday, amid a meltdown for most emerging market currencies and stock markets across Asia and Europe on the first day of trading after President Donald Trump imposed higher tariffs on Canada, Mexico and China
Read about:
Rupe exchange rate
What is rupee depreciation?
Key takeaways:
The rupee’s movement will depend on global trade negotiations, U.S. Federal Reserve policies, and India’s domestic economic indicators like inflation and GDP growth. The RBI will likely continue interventions to prevent excessive depreciation while balancing economic growth
As of February 4, 2025, the Indian rupee (INR) is trading at approximately 87.11 per U.S. dollar (USD).
This reflects a slight recovery from the previous day's record low of 87.28, which was influenced by U.S. President Donald Trump's imposition of tariffs on imports from Mexico, Canada, and China.
The rupee's depreciation has been attributed to concerns over a potential global trade war and the resulting market volatility. In response, the Reserve Bank of India (RBI) has been actively participating in the foreign exchange market to manage the currency's volatility.
For the most current exchange rates, it's advisable to consult reliable financial platforms or currency converters, as rates can fluctuate throughout the day
Implications of a Weak Rupee
- Imports Become Costlier: India, being an import-dependent country (especially for crude oil and electronics), will see higher prices, leading to inflationary pressures.
- Exports Become Competitive: A weaker rupee makes Indian exports (like IT services and textiles) cheaper and more attractive globally.
- Foreign Investment: If foreign investors see a declining rupee as risky, they may withdraw investments, further impacting market sentiment
Rupee depreciation refers to a decline in the value of the Indian rupee (INR) against a foreign currency, especially the U.S. dollar (USD). It means that more rupees are required to buy one unit of foreign currency, making the rupee weaker in international markets.
For example, if the exchange rate changes from ₹75 per USD to ₹87 per USD, it means the rupee has depreciated because you now need more rupees to buy the same 1 dollar