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US Dollar to Indian Rupees at Lifetime Lows in March 2022

US Dollar to Indian Rupees hits a lifetime low level in March 2022, when it touched 77.18 on March 8. The CPI inflation is up at 6.07% in February.

US Dollar to Indian Rupees at Lifetime low at 77.18

The USD/INR in the foreign exchange market is at 76.43 on Tuesday, March 15, 2022. The US Dollar to Indian Rupees is trading above 76 levels from March 4, 2022. The USD/INR was trading at 74.34 on February 21.

CPI inflation is at 6.07% in February, while it was at 6.01% in January. Food and oil contribute to the slide in the US Dollar to Indian Rupees.

The American Dollar gains strength with the prolonging Russian-Ukraine war. The US Dollar rose to 99.25, resulting in further weakness in the US Dollar to Rupees.

US Dollar to Indian Rupees at Lifetime Lows in March 2022
US Dollar to Indian Rupees at Lifetime Lows in March 2022

USD to Indian Rupees Slumps as Consumer Price Index Rises to 6.07%

The National Statistical Office (NSO) released data on the Indian retail inflation rate in February 2022 at 6.07%.

Retail inflation measured by the Consumer Price Index has gone up to 6.07%. Wholesale Price Index (WPI) maintains its double-digit rating at 13.11% in February, year-on-year.

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Conditions seem to worsen as food prices soar. The inflation rate shot up to an eight-month high, dragging the US Dollar to Indian Rupees lower.

Rural inflation remains high at 6.38%, while urban inflation is lower at 5.75% in February. Clothing and footwear, vegetables, oils and fats, and egg prices are hit by high prices in February.

Crude prices shot up to $130 per barrel in March, causing an increase in fuel prices. The Russian war on Ukraine is the cause for the rising fuel prices.

India is a Leading Importer of Crude Oil

High inflation from rising crude prices is hurting consumer buying. Increasing demand for the greenback keeps the Indian Rupee under pressure. The Reserve Bank of India claims that the weakness in the Indian Rupee is due to the rising conflict between Russia and Ukraine.

Brent crude is at 110.52 per barrel. The surge in Brent crude oil weakens the Rupee as India is one of the leading importers of crude oil.

If crude oil prolongs trading at around the $100 per barrel area for long, it will drive up inflation. GDP growth will come down, and inflation will rise higher.

Import business will slow down with the weakening rupee. Students studying abroad will find it hard to meet educational expenses or travel to their home country.

Heavy selling by the Indian banks slowed down the pace of the depreciating Rupee. Huge foreign capital outflows from the forex market weaken the Indian Rupee. Institutional investors overseas have been selling their investments from the stock exchange too.

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Crude prices retraced from the life-highs, which is positive for the Rupee value.

Central Bank of India to Decide on Monetary Policy

The Reserve Bank of India has to decide on its monetary policy. The currency exchange rate is the leading indicator for the central bank to decide on policymaking. High capital outflows are weakening the Indian Rupee. Economic performance has come down with high inflation and disruption in crude supply. The USD/INR has come down, and imports costs are rising, weakening the economy.

The central bank is unable to hike interest rates as the global war is causing tremors in the supply chain. High inflation slows economic growth, leading to a surge in commodity prices like vegetables, clothing, and fuel.

Geopolitical Tension Disrupts Forex Markets

The geopolitical tension disrupts the global supply chain. Crude oil is the worst hit as Russia is the chief exporter of crude oil.

Commodity prices are rising high.

Talks between Russia and Ukraine are not going well, and forex investors are not willing to take risks.

The demand for safe-haven assets makes the greenback a good investment. Meanwhile, investors await the Fed policy rate decision this week. The Fed may hike rates by 25  or 50 basis points.

The Dollar Index rose to 99.42 on March 7, weakening the Rupee value to 77.187 on March 8, 2022. The USD/INR breached the 77 levels on Monday, March 7.  The sharp surge in crude prices above the $100 per barrel weakened the Indian Rupee. The Rupee sapped to a lifetime low as it crossed the 77 mark on the foreign currency exchange.

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The US Dollar is gaining strength against ASEAN currencies in the forex markets.

The USD/SGD weakened to 2022 lows at 1.3670 on March 8. The Singaporean Dollar to USD currency change is at 0.7324.

1 HK Dollar to USD currency trading is at a two-year low at 0.1277. The controversial law passed by China has made it easy to punish activists and protestors, leading to protests and calamity in Hong Kong. There is non-stop unrest in Hong Kong, which is slowing economic growth.

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