New Delhi, Mar 7 (EFE).- The Indian rupee on Monday plummeted to its lowest value in history, settling at just above 77 rupees per US Dollar in the international currency market, after being hit by a surge in oil prices due to the ongoing armed conflict between Ukraine and Russia.
Rupee was trading at 77.02 units per USD on Monday afternoon, dropping below the earlier lowest point of 76.9 rupees per USD, recorded in April 2021.
The massive spike in international oil price indices such as Brent, which jumped to $130.21 per barrel on Monday, and the exodus of foreign capital due to the Ukraine war are the main reasons behind rupee’s devaluation, Rohit Azad, a professor of economics at the New Delhi-based Jawaharlal Nehru University, told EFE.
He said that amid the uncertainty caused by the conflict, foreign investors are withdrawing their money from India and depositing it in “safe havens,” while “oil prices are skyrocketing, so our import bills are rising dramatically,” leading to the rupee losing value.
The Indian economy, sixth largest in the world, is heavily dependent on imported oil, with its February petroleum imports bill standing at $15 billion, accounting for 27 percent of all imports during the month.
Since the beginning of the conflict on Feb. 24, Brent has jumped over 34 percent and on Monday went past it historic highest point – registered in 2008 – due to lack of supplies.
Amid this trend, Azad said he did not expect the rupee to recover while the conflict was raging, and this could lead to a further spike in the high inflation levels already being witnessed in India over the past few months and affect the quality of life in the country.
Rupee has already been weak since the beginning of 2022 after four years of an uninterrupted slide and many experts had predicted it to drop to its lowest point by the middle of this year, but the Ukraine-Russia war has accelerated its depreciation.
The Indian currency has continued to depreciate since Jan. 1, 2018, when it stood at 63.85 rupees per USD, having lost 17 percent of its value since then as per Monday’s figures. EFE