Government officials say that the dollar’s rise against the rupee is very light.

New Delhi: The Center and the Reserve Bank of India (RBI) are taking steps to attract dollar inflows to make the greenback’s appreciation more gradual and smooth against the rupee. This is being done even though the strength of the US currency against the rupee has been mild, government sources said.
He said the greenback’s strength against the Indian rupee has been much higher this time compared to previous opportunities for dollar strengthening such as 2013 (‘taper tantrum’), 2008 (global financial crisis) and 1997-98 (Asian financial crisis). . more silent.
Sources said that in 2013, from May 3 to August 28, the US dollar rose from 53.65 to Rs 68. Rs 80 – Appreciation of 28%. In 2008, from February to October, the US dollar rose from Rs 39.12 to Rs 49. Rs 96 – Again, 28% appreciation of the US currency. Between August 1997 and August 1998, the US greenback strengthened 22% against the Indian currency, the source said, citing data.
“The strength of the US dollar is due to a change in risk appetite in financial markets. When interest rates are low and the dollar supply is sufficient, investors take risk. They invest in the stock markets of emerging economies like India. Indian stock markets gained a lot in 2020 and 2021 because of risk appetite on the part of international investors,” said a source.
The rupee moved very close to the 80 level against the US dollar, with the greenback trading at 79.96 at the interbank forex market on Thursday. The RBI, which is defending the rupee from dollar selling, said forex reserves fell by $8 billion to a 15-month low of $580 for the week ended July 8. 3 billion.
The exchange rate fluctuations have sparked controversy between the government and opposition parties, who have accused the authorities of mishandling the situation.
Sources said that several factors such as rising inflation across the world and the impact of the war in Ukraine, which led to a rise in oil prices, prompted investors to be cautious and they started withdrawing money from emerging markets like India. Foreign investors have pulled out around $31. 5 billion from the beginning of 2021-22 and by July 15 in 2022-23, according to available data.
“All these factors have contributed to the strengthening of the US dollar against the Indian rupee. But, to reiterate, the US dollar has strengthened not only against the Indian rupee but also against several other currencies including major currencies. In fact, the US dollar has strengthened more against those currencies than the Indian rupee,” said the source.
In other words, the rupee has strengthened against the euro, the Japanese yen and the British pound in 2022.

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