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When Rupee, Euro and Yen Collapse in Price, Will Crypto Finally Have Its Day?

The Indian rupee hit a new all-time low on Friday in another tumultuous week for the ever-depreciating fiat currencies.

On the interbank foreign exchange (FX) exchange, the rupee opened at ₹81.08 against the dollar before falling to ₹81.23. In response, the Reserve Bank of India (RBI) was forced to sell dollar reserves to stabilize its volatile currency.

The rupee decline follows the euro and yen

According to a report by Reutersthe aggressive government intervention by the Indian central bank could offer hope in the short term.

“The intervention at ₹81.20 was quite aggressive and may set a floor for the rupee for now,” said an almost reassuring private bank trader.

As the rupee’s weakness was exposed, other fiat coins from around the world were also exposed. In Europe, the euro hit a 20-year low, with €1 now equal to 98 cents. On Thursday, the Bank of Japan stepped in to protect a rapidly weakening yen as it intervened in the foreign exchange market for the first time since 1998.

Around the globe, fiat currencies tumble and fall amid runaway inflation, the war in Ukraine and commodity shortages.

Will Indian Tax Laws Drive Crypto Adoption?

For quite some time, Indians have been among the most avid crypto adopters in the world. According to Chainalysis’ 2022 Crypto Adoption Index, India ranks fourth in the world for adoption. That marks a two-place drop from 2021, when the nation was ranked number two in the world.

According to Chainalysis, part of the reason for this ranking drop is a far tighter regulatory and financial landscape. On April 1st, the Indian government introduced a highly punitive 30% tax on all crypto profits. They then added another 1% tax on all transactions.

According to Sushil Kumar Modi, a member of India’s ruling party, this tax does not go far enough. Modi wants the direct tax to be raised to 50%, and then add a goods and services tax (GST) of 18%. According to Modi, the government wants to “make life hell” for all crypto investors.

One could argue that government economic management and the rupee in particular is already achieving this goal for all Indians whether they invest in cryptocurrencies or not.

As uncomfortable as the Indian government may be trying to make cryptocurrency, their mismanagement of fiat currency makes it all the more palatable again.

A recent survey by KuCoin and reported by the economic times, would tend to support this view. The report revealed that more than half of Indian crypto investors plan to reinvest in digital assets within the next six months.

With fiat currencies proving to be a highly unreliable asset class, who can blame them?

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