The rupee broke the psychological level of 80 per dollar on Tuesday. It may be noted that in a written response in Lok Sabha on Monday, Finance Minister Nirmala Sitharaman attributed the rupee’s depreciation to global factors such as the Ukraine crisis, rising crude oil prices and the financial tightening of the global economy.
She added that foreign portfolio investors (FPIs) have withdrawn $14 billion from Indian equity markets so far in the current fiscal year due to monetary tightening in advanced economies.
“Global factors such as the Russia-Ukraine conflict, rising crude oil prices and tightening global financial conditions are the main reasons behind the Indian rupee’s weakening against the US dollar. Currencies like the British pound, Japanese yen and euro have weakened more against the US dollar than the Indian rupee and hence the Indian rupee has appreciated against these currencies in 2022,” says Sitharaman.
“The tightening of monetary policy in advanced economies, particularly in the United States, tends to cause foreign investors to withdraw funds from emerging markets. Foreign portfolio investors have withdrawn about $14 billion from Indian equity markets so far in fiscal 2022-23,” adds Sitharaman.
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