Why is the USD to INR Exchange Rate Down today on 15th March 2023 (1st half of March 2023)?

Key points:

• The rupee is rising against the US dollar.
• To reduce inflation in the United States, the Federal Reserve has raised interest rates to 4%.
• Both the US and Indian inflation rates are falling.
• RBI is expected to increase the interest rate by 25 bps in February 2023.
• An economic slowdown was observed in India during the most recent quarter.

Many economists think that after 2023, the economy will grow differently. Even though the world economy is weak, the United States economy is improving. In the last quarter, India's GDP grew by 13.5%, but the value of the rupee didn't change. Experts agree that India's economy should only grow once a year, not every three months. The Reserve Bank of India (RBI) has helped improve the Indian economy by working with other government agencies. The decision by the government to raise interest rates and limit trade has helped the currency and the economy.

USD to INR Exchange Rates
Date	Open	High	Low	Close
01-Mar-23	82.64	82.88	82.38	82.64
02-Mar-23	82.42	82.66	82.30	82.42
03-Mar-23	82.36	82.58	81.70	82.36
06-Mar-23	81.71	81.97	81.62	81.71
07-Mar-23	81.85	82.03	81.74	81.85
08-Mar-23	82.07	82.28	81.87	82.07
09-Mar-23	81.96	82.09	81.78	81.96
10-Mar-23	82.02	82.23	81.84	82.02
13-Mar-23	81.96	82.31	81.63	81.96
14-Mar-23	82.42	82.67	82.23	82.42
15-Mar-23	82.23	82.46	82.18	82.47

Right now, one U.S. dollar is worth 82.10 Indian rupees. In the second half of January, prices were more stable than in the first half of this month. It shows how far the rupee has come and how it could become famous worldwide. One rupee was worth an all-time high of 82.88 on March 1, 2023. One rupee was worth an all-time low of 81.62 on March 6, 2023. Recent changes in the value of the Indian rupee make us worry about the long-term health of the Indian economy and currency. Over the past two weeks, the change has been 0.13 points on average per day. The Reserve Bank of India (RBI) is India's central bank. It works with the government to keep the value of the rupee stable. Remember that things might stay the same for a while. The U.S. Federal Reserve and many other central banks worldwide have cut interest rates in response to inflation.

Several parts must work well for the currency to be solid and stable. They are:

1. Crude Oil
2. Gold imports
3. GDP & Import/Export
4. Inflation rates
5. Interest rates
6. Foreign and Domestic Investment

1. Crude Oil

India gets over 80% of its crude oil needs from places like the United Arab Emirates (UAE), Russia, and Saudi Arabia. But only about 10% of India's trade goes through its ports. Gabon, Colombia, and Canada now send crude oil to India. Nigeria and Iraq have been sending oil to India for a long time. Russia and Ukraine are still in a trade war, a global flu epidemic, and a worldwide oil crisis. All of these things are making it harder to do business. A barrel of crude oil now costs $120, a new high. A barrel of oil went from $70 to $80. By the end of the second quarter of 2022-2023, India will have paid Brazil $722.54 million for oil. More than 70% of the crude oil used in the US comes from other countries.

The table and graph below show that prices have gone down recently. Between March 7 ($80.94) and March 13 ($72.3), 2023, a barrel of oil went up by $19. The price has gone up since the beginning of the month. From now on, our economy and way of life will depend on crude oil. Work productivity could decrease, prices could increase, and the Indian rupee's value could decrease.

Crude Oil (in USD)
Date	Open	High	Low	Close
01-Mar-23	76.85	77.85	76.12	77.69
02-Mar-23	77.74	78.59	77.23	78.16
03-Mar-23	77.89	79.90	75.83	79.68
06-Mar-23	79.92	80.63	78.32	80.46
07-Mar-23	80.50	80.94	77.06	77.58
08-Mar-23	77.32	77.73	76.11	76.66
09-Mar-23	76.50	78.06	75.43	75.72
10-Mar-23	75.65	77.11	74.77	76.68
13-Mar-23	76.60	77.47	72.30	74.80
14-Mar-23	74.7	74.9	70.78	71.33
15-Mar-23	71.56	72.43	71.51	72.41

2. Gold imports

Gold is often used to make jewelry in India, so it has a lot of meanings. People in 2022 didn't save enough gold before the pandemic, leading to the ensuing panic. The Indian economy is in trouble because of rising prices and more gold imports. As a response, the government added 15% to the already high tax of 10.75% on gold imports. Even though taxes have increased, people still buy gold because the low prices make up for the tax hike.

The prices of gold have gone up, as shown in the table and graph below. Gold is more expensive now than it was during the last two weeks of January when the average price was $1842.14. Gold costs between $1811.50 and $1913.10 from March 8 to March 13, 2023. When gold from other countries comes into the country, inflation quickly follows. To keep inflation from getting out of hand, the Federal Reserve should cap how much gold governments can buy.

Gold Rate (in USD)
Date	Open	High	Low	Close
01-Mar-23	1,827.10	1,841.70	1,827.10	1,837.70
02-Mar-23	1,830.00	1,836.30	1,830.00	1,833.50
03-Mar-23	1,837.30	1,855.40	1,837.30	1,847.70
06-Mar-23	1,853.30	1,853.80	1,844.20	1,847.90
07-Mar-23	1,840.90	1,840.90	1,813.90	1,813.90
08-Mar-23	1,811.60	1,812.90	1,811.50	1,812.70
09-Mar-23	1,816.40	1,829.30	1,815.60	1,829.30
10-Mar-23	1,852.30	1,868.50	1,852.00	1,862.00
13-Mar-23	1,890.80	1,913.10	1,875.10	1,911.70
14-Mar-23	1,912.20	1,912.20	1,901.10	1,906.20
15-Mar-23	1908.2	1910.5	1904	1907.2

3. GDP & Import/Export

The effects of the trade deficit on GDP can be seen in different ways and depend on several other things. The value of a country's currency and the health of its economy can be affected by how much it buys and sells. The value of a currency goes down when there are more imports than exports, and it goes up when there are more exports than imports. Those who hold a currency that loses value have a hard time. Because of this, GDP will go down.

India: Imports & Exports (in US$ Million)
Date	Export (US$ Million)	Import (US$ Million)
May-22	32.20	52.70
Jun-22	24.60	45.50
Jul-22	20.20	22.30
Aug-22	24.30	27.10
Sep-22	29.7	28.10
Oct-22	24.60	15.90
Nov-22	30.70	21.70
Dec-22	20.40	5.70
Jan-23	29.60	7.50

The next graph shows how difficult it is to predict the trade deficit. It was interesting to see how the share of imports from India increased from March to July. Things are getting better now, though. In October and December of 2022, the trade balance was positive for the first time that year. India's trade deficit with the rest of the world grew by $8.7 million because of this surplus. There has always been a clear difference between what is exported and what is imported. Even if things don't go as planned, September's positive delta is a reason to be hopeful.

GDP Rate in India
Date	Rate (%)
Jul-21	20.10
Oct-21	8.40
Feb-22	5.40
Jul-22	13.50
Oct-22	6.30

When a country has a trade deficit, its currency must be devalued. It hurts how quickly and easily everyday things can be done. The GDP went from 5.4% in February 2022 to 13.5% in July 2022, even though the currency's value went down. But it went down to 4.4% in January 2023. India's economic growth has been nothing short of incredible. The Indian government worked hard to make the plan work. By 2023, the RBI thinks growth will slow down. You can learn much about the Indian economy and its future from this. If this trend continues for three calendar quarters, the currency's value will go up.

4. Inflation rates

If the GDP goes down and inflation goes up, the value of a currency could go up or down. The annual inflation rate was 6.71 percent in July, the lowest since January 2022. In June, it was less than 7.01 percent.

India's Inflation rates
Date	Percentage
Jan-22	6.01
Feb-22	6.07
Mar-22	6.95
Apr-22	7.79
May-22	7.04
Jun-22	7.01
Jul-22	6.71
Aug-22	7.00
Sep-22	7.41
Oct-22	6.77
Nov-22	5.88
Dec-22	5.72
Jan-23	6.52

The rate was 6.1% in January of that year, but 6.52% in January of the following year. The economy has grown so much that this can only happen sometimes. Since these things are all connected, it is often hard to find a single cause for this difference.

US Inflation rates
Date	Percentage
Feb-22	7.90
Mar-22	8.50
Apr-22	8.30
May-22	8.60
Jun-22	9.10
Jul-22	8.50
Aug-22	8.30
Sep-22	8.20
Oct-22	7.70
Nov-22	7.10
Dec-22	8.00
Jan-23	6.40
Feb-23	6.00

Inflation has been high in the US and India over the past few years. Inflation in the United States reached a new record high of 9.1% in May 2022. The Federal Reserve raised the repo rate by 75 basis points to stop prices from going up. Inflation was 6.0% in February 2023, the lowest level in three years. The United States did better than India when compared to the Indian rupee.

5. Interest rates

In July 2022, the Reserve Bank of India raised the rate by 50 basis points. It was done to make prices less expensive. The rate of interest went up from 4.4% to 4.9%. If the repo rate increases, banks will charge more for deposits and lend at higher rates to cover the cost. Most people in India agree that raising interest rates would benefit the economy. In 2020, 4% of the population died at the fastest rate ever because of the coronavirus pandemic. The repo rate went from 5.24 percent to 5.25 percent in August 2022, which gave September a gain of 0.1%. The rate will change in December 2022, and the new rate will be 6.50%. Most people think that after the Union Budget is shown in February, the Reserve Bank of India (RBI) will raise the repo rate again.

RBI Bank Interest Rates
Date	Rate (%)
Jun-19	5.75
Aug-19	5.40
Oct-19	5.15
Mar-20	4.40
May-20	4.00
May-22	4.40
Jun-22	4.90
Jul-22	5.40
Aug-22	5.40
Sep-22	6.15
Dec-22	6.50

The Reserve Bank of India and the Federal Reserve of the United States have raised interest rates because prices are increasing. It's crazy that the repo rate went up by 75%. As of October 2022, the rate of interest is 4%. Since things are getting better, inflation has also come down. Interest rates are likely to keep going up as long as the Federal Reserve thinks it's essential to do so to keep the U.S. economy strong, which is a widely held belief. The main reason the Indian rupee is losing value against the U.S. dollar is that India and the U.S. are getting increasingly different in culture and language.

US Fed Interest Rates
Date	Interest Rate
Aug-21	0.09
Sep-21	0.08
Oct-21	0.08
Nov-21	0.08
Dec-21	0.08
Jan-22	0.08
Feb-22	0.08
Mar-22	0.2
Apr-22	0.33
May-22	0.77
Jun-22	1.21
Jul-22	1.58
Aug-22	2.5
Sep-22	3.25
Oct-22	4.00

6. Foreign and Domestic Investment

Foreign direct investment (FDI) increases when interest rates increase (foreign direct investment). This problem would have the same pros and cons as any other problem. By buying more foreign currency, the Reserve Bank of India (RBI) hopes to lower the value of the rupee. The RBI's decision to sell more foreign currency, which raised the value of the rupee, will cause about $83 billion more to be invested abroad in 2022 than in 2021. By the end of the fiscal year 2022–2023, the RBI will have assets worth more than $100 billion. It could be the start of a long, slow decline in the value of the rupee.

India's FDI
Date	FDI (US$ Million)
Jan-22	6388
Feb-22	4617
Mar-22	4593
Apr-22	6459
May-22	6152
Jun-22	3978
Jul-22	4971
Aug-22	2376
Sep-22	2974
Oct-22	3013
Nov-22	2411
Dec-22	4411

The graph below shows that companies that invest in other countries directly (FDI) tend to buy stocks in cycles. Sales went up between March and April 2022, but by December 2022, they had gone down to about $4,411,000.00. As India's economy improves, foreign investment will likely drop even more. In 2023 or 2024, the Indian economy and the value of the rupee will get a lot better.

The Indian Minister of Finance said, "The dollar's value increased. It won't change how much a rupee is worth." The second sentence makes sense to say. Few groups are as good at stabilizing the economy as the Reserve Bank of India (RBI) in India and the Federal Reserve System (Fed) in the US. What happens in the rest of the world affects the value of the rupee and the Indian economy. To figure out why performance is so bad, it looks at many factors, many of which are linked. But the government and the Reserve Bank of India are taking steps to get things back under control. Together, we can make it more likely that the economy will keep growing and that the currency will stay stable until 2023.