Reasons why the rupee is falling every day - join our service
Reasons why the rupee is falling every day
The rupee fell past 69 to the dollar to a record low on Wednesday, plunging
as much as 4 per cent to hit 69.08, The rupee has fallen by 9 % in the last few
trading sessions. Here are 10 main reasons that experts say are responsible for
the Indian rupee — which has depreciated as much as 20 per cent this year — to
touch new lows each passing day:
Food Security Bill, after it got passed in LS day before yesterday, Rupee
took it for a ride and fall got accentuated from past 2 tradign session. It is
an ambitious program by Sonia Gandhi which Indian Economy is not willing to
bear.
Low forex reserves: India’s foreign exchange reserves are enough to cover
imports of only seven months. The forex reserves have declined in the recent
months. Due to low reserves, the RBI can’t intervene aggressively in the
currency markets.
Growth slowdown: India’s gross domestic product (GDP) growth fell to a
decade low of 5 per cent in 2012-13. The situation is unlikely to improve much
this year. Foreign investors are pulling money out of the Indian markets due to
slow growth. We will get latest Figure on GDP on 30 which will show how grave
the situation is.
Widening current and Fiscal account deficit: This is resulting in creating
more actual as well as speculative demand for the dollar and other convertible
currencies. India’s current account deficit was financed by foreign money for
the last many years. Withdrawal of money by overseas investors is leading to
the weakness in the rupee.
Recovery in the US: The slow but steady recovery in the US is making the
greenback stronger against other currencies. With Recovery in USA,Fed will
withdraw or ease the fiscal stimulus package could potentially put the brakes
on funds for developing economies.
