Hello everyone this is the part 2 of last blog,

In other words, why is the Indian rupee depreciating against the US dollar?!

The United States is one of the countries that is suffering economically due to war and rising prices due to inflation.

Currently (Nov 2022) the US is in a hyper-inflationary state. That means a steep rise in prices.

Due to rise in commodity prices, people are unable to spend within their income.

They try to earn income by doing extra work.

As a result, the US Federal Reserve has raised the repo rate. As more people seek to invest, the value of the dollar rises rapidly.

As repo raises interest rates, US inflation also decreases and demand for dollars increases due to bonds, investments, etc.

The interest rate charged on short-term loans given by RBI to banks is known as Repo (Repurchase Agreement) interest.

If the RBI raises the repo rate, the banks that have taken loans from the RBI will also be in a position to raise it.

When interest rates rise, people cut back on spending. Inflation will decrease when purchases are reduced.

Although America is a superpower, a strong country, and a rich country, America is also in a lot of debt and problems.

Jobs are down and skilled people are not available.

Just because the dollar is appreciating right now doesn't mean the U.S. is in great economic shape.
It's just a balloon that can burst at any time.

Or the US will run into trouble as electric vehicles proliferate and the dollar declines as a common currency.

That is why America destroys or pressures all the countries that pose a threat to the dollar.

Due to changes in electric vehicles, demand for organic dollars will decrease.

But the dollar as the common currency will change depending on how other countries are going to export and import.

Taking India as an example, the RBI is taking steps to use the rupee for transactions.

Creating a public account called Vostro.

In this account both the concerned countries can make money transfer using their national currency.
The dollar need not be the common currency.

However, even if the demand for fuel decreases, European countries will still need gas.

The reason is that Europe is a cold region, so they buy gas to cope with it, and they also use gas for vehicles.

As this transaction also decreases from the dollar, the demand for the dollar will decrease

For example, Russia is forced to transact in rubles.

If most European countries use rubles instead of dollars to buy gas, demand for dollars will decrease.

European countries are heavily dependent on Russia for gas.

Thus, when the demand for the dollar decreases, the value of the dollar falls. At that time the Indian rupee will appreciate against the dollar.