Increasing fiscal deficit shows its impact on rupee?

Currency

Generally, fiscal deficit shows the dependence of a country on the foreign debt to match the expenses which exceed the revenues of the government. It is the estimated borrowing by the government to meet the increased expenditures in a year. For this the government borrows from the international financial institutions like the World Bank and the International Monetary Fund. It is often expressed as the percentage of the GDP. It shows the excess of expenditure over the government receipts other than borrowings. Greater fiscal deficit means greater borrowings. For the payment of all these foreign debts along with interest accrued to them, we require dollars and this ends up raising the value of dollar vis-à-vis the Indian rupee.

  • The Indian rupee appreciated this week by ₹1.05 gain compared with the previous week close.
  • Last week Indian rupee closed at ₹70.15 with the aggregate gain of 0.76 paisa.
  • This week on Friday rupee closed at ₹69.09 with gain of 0.26 paisa.
  • Highest gain 0.27 paisa on Monday and no fall in the week.

 

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