Hyderabad : The rupee hit 80 per dollar for the first time ever on Tuesday, as traders focus on central bank meetings this week, especially the US Federal Reserve.
The real fear now is that after the rupee breached the 80-to-a-dollar level, the fall could be even steeper, as a break of key psychological rate increases bets in favour of a free fall after, as we have witnessed since the rupee weakened beyond the 77 per dollar rate.
When the rupee depreciates, buying (importing) something from outside India becomes costlier. There is a flip side too. By the same logic, if one is trying to sell (export) goods and services to the rest of the world (especially the US), a falling rupee makes India’s products more competitive because depreciation makes it cheaper for foreigners to buy Indian products.