Strong Dollar and its Implication for India

Recently, the US Dollar Index, which measures the greenback’s exchange rate against six major global currencies, surpassed its 20-year high and is currently trading at over 105.

  • A majority of global institutional investors are based out of the US.
  • As they withdraw from risky assets and repatriate their money back home, dollar demand surges, further strengthening the Dollar Index.

Impact on Indian Rupee

  • High Import Bill: India relies on dollar-denominated imports for over 85 per cent of its crude oil requirements and imports more goods than it exports. Therefore, India’s import bill usually shoots up when the dollar strengthens, perversely increasing ....
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