For the beleaguered Indian rupee, which was already battling a hardening US dollar and high crude-oil prices, the heavy sell-off of emerging-market currencies triggered by a declining Turkish lira could not have come at a worse time.
After showing mild recovery in opening trade on Tuesday, the rupee extended weakness in the morning trade and breached the 70 level against the dollar for the first time. The Indian unit hit an all-time low of 70.08 against the US currency.
The rupee had opened 11 paise higher at 69.85 against the US dollar on Tuesday. On Monday it had nosedived to a fresh all-time low of 69.93 against the dollar, as a heavy sell-off in emerging-market currencies fueled demand for safe-haven assets such as US dollars and Japanese yen.
The rupee is down almost 9% this year, making it Asia’s worst performer. A weaker rupee could complicate the Reserve Bank of India’s task of keeping inflation in check.
If you look at the Australian $ it has depreciated the same as the Indian Rupee against the US $, and even more so than other currencies like the Indonesian rupee and even the Vietnamese dong. This is nothing to be concerned about, all currencies are affected by the rise of the US$ (for now)
It is the US dollar that is appreciating, and it is appreciating not only against the Indian Rupees but also against almost all other currencies. The appreciation of the US dollar is a good thing for USA in the short term, meaning for a period of one year. During that period, the GDP of USA will increase, unemployment rate will decrease, and the rate of inflation will be contained. But, the following ten years will be very bad for USA because the GDP of USA will increase at a decreasing rate and may even turn negative, and the rate of unemployment will increase.