Rupee Falls to New Record Low, Formal Job Creation Continues to Decline
New Delhi: The fall of the Indian rupee continued, with the currency dropping to a new record low against the U.S. dollar on Monday (September 1), declining to 88.33 to the U.S. dollar, crossing the 88.3075 lifetime low hit in the previous session.
The depreciating rupee reflects the increasing concerns over the higher U.S. tariffs on Indian goods and its consequences.
"Unless we see some improvement in trade relations between India and the U.S., we cannot expect any stability in the rupee, and we could see test of fresh lows frequently. Everything now depends upon the RBI, on how they plan to manage the markets," V.R.C. Reddy, treasury head at Karur Vysya Bank, told Reuters.
The RBI has a history of intervening in to curb excessive rupee volatility, especially in wake of heightened uncertainty or rampant speculative activity. In the past, the RBI has repeatedly said that it does not target a specific exchange rate. But its actions are closely monitored and can significantly influence short-term rupee dynamics.
With a further increase in tariffs by 25% the total tariff imposed by the US on Indian goods has gone up to 50%, resulting in a blow for India's export competitiveness, particularly in sectors such as textiles and engineering goods.
Slowdown in exports could also affect corporate revenues and profits. In the past three sessions, foreign investors pulled $2.4 billion from Indian equities, said the Reuters report.
The expected slowing in exports is also expected to widen the country’s trade deficit.
Formal job creation falls for two straight years
Meanwhile, the net formal job creation under the Employees' Provident Fund Organisation (EPFO) continued to fall for two straight years through FY25, sharply retreating from its record in FY23.
While 13.1 million net formal jobs got created under EPFO in FY24, the figure declined to total of 12.9 million jobs in the last fiscal year. The figure was 13.8 million in FY23 after which it has been in a consistent decrease, with a year-on-year dip of 1.3% in FY25, and 5.1% in FY24, reported Economic Times.
The number of establishments remitting first Electronic Challan cum Return (ECR) for a month stood at 52,309 in FY25, reflecting a fall of 6.6% from 56,023 establishments a year ago.
The EPFO did not respond to queries of the newspaper, said the ET report.
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