Negative trends in domestic equities, interest rate hikes in the US, foreign fund outflows, rising trade deficit and geopolitical risks due to the Ukraine war are some of the other factors causing the depreciation of the Indian rupee, according to Indian media reports.
The currency depreciation is also likely to drive up the costs of importing crude oil and other commodities, thus fuelling inflation. India fulfils 85 per cent of its crude oil and 50 per cent of its gas requirements through imports.
The Reserve Bank of India (RBI) may increase the repo rate by 50 basis points to control inflation in the country. Its bi-monthly monetary policy is slated to be announced later this week.
ALCHEMPro News Desk (KD)
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