Why Rupee Hit All Time Low and What Does it Mean for Steel Industry?

The Indian Rupee was one of the resilient currencies in the world till the beginning of 2018. Since 2018, it has tumbled about 8 per cent in value against the US dollar. The Rupee on Thursday morning hit an all time low to 69 per US dollar. Let us see, what is driving this depreciation and what does it mean for Indian steel industry

Reasons for Fall in Indian Rupee

1. The root cause is higher crude oil prices in global market which has reached to USD 77-78 a barrel against USD 75.49 a month back

2. Market is nervous on rising NPA's. According to a recent financial stability report (FSR) from RBI (Reserve Bank of India), report bank's gross NPAs increased to 12.2 percent by March 2019 from 11.6 percent in March 2018. This means every 100 rupee lent by bank, Rs 12.2 is less likely to come back

3) Market is also watching US and China trade war, which may have impact on global currency market

What does it mean for Indian Steel Industry?

1. Exporters will benefit on Rupee depreciation. We can expect more export deals taking place in coming weeks. Indian finished steel exports were recorded at 9.6 MnT in FY18, which is about 9% of total crude steel production.

2. Imports will become costly- Imports of coking coal, scrap, coke and steel will become expensive.

3. Domestic steel prices should find support, which have been under pressure in last few weeks.