Rupee depreciation may push import bill by $15bn

New Delhi, PTI: The depreciation of Indian rupee against the US dollar is expected to push the country's import bill by about $15 billion, think tank GTRI said on Thursday. Compared to December last year, the Indian Rupee (INR) has depreciated 2.34 per cent against the US dollar, moving from Rs 83.25 to Rs 85.20, while the Chinese Yuan has weakened by 0.06 per cent, the Global Trade Research Initiative (GTRI) said. It added that this depreciation of the INR will negatively impact gold imports, especially as gold prices have surged 27 per cent from $2,066.26 per ounce in December 2023 to $2,617.11 per ounce in December 2024.

India's oil imports, mostly priced in USD, could have been significantly costlier due to the rupee's depreciation, however, the impact has been mitigated by a 5 per cent drop in Brent crude prices, from $77.6 per barrel in December 2023 to $73.7 per barrel in December 2024, it said. "Overall India's import bill will increase by about $15 billion due to the INR depreciation impact," GTRI Founder Ajay Srivastava said, adding that the most significant effect of the INR's depreciation will be on India's $100-billion worth of industrial goods imports from China. Since both the INR and the yuan have weakened against the US dollar, the dual depreciation amplifies the cost of these imports, further straining trade balances, he said.

Rupee plunges 12 paise to close at all-time low of 85.27 against US dollar The rupee stayed weak for the third straight session and fell 12 paise to settle at a fresh all-time low of 85.27 (provisional) against the US dollar on Thursday, amid a strong greenback and rising crude oil prices. Forex traders said, increased month-end as well as year-end dollar demand from importers and fear of an aggressive import tariff by the Donald Trump administration lifted the American currency. At the interbank foreign exchange, the rupee opened weak at 85.23 and touched the lowest-ever level of 85.28 against the greenback during intraday trade. The unit finally ended the session at its lifetime low closing level of 85.27 (provisional) against the dollar, registering a loss of 12 paise from its previous close. The rupee fell 4 paise to settle at 85.15 against the US dollar on Tuesday, a day after losing 9 paise on Monday.

The forex market was closed on Wednesday for Christmas. According to Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, the rupee fell to a fresh all-time low on strong dollar and rising US treasury yields that are at the highest levels in seven months. Also, he said the surge in crude oil prices, month-end/year-end dollar demand and FII outflows may also weigh on the rupee. "However, any intervention by the RBI may support the rupee at lower levels. Traders may take cues from weekly unemployment claims data from the US," he added.