What causes to Rupee Depreciation.....?

Introduction
What is currency? medium of exchange for goods and services accepted form of money [coins and paper notes] issued by a government and circulated within an economy each country has its own currency Major currencies in Glob

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How define the value of currency? - When demand > supply, currency becomes more valuable and vice versa

Reasons For rupee Depreciation

Reasons For rupee Depreciation

1. Political paralysis:- unable to transact any meaningful business - Coalition politics make things difficult for the government to push the much-needed reforms in many sectors - This is creating panic among overseas investors who want to invest in India

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2. Volatile Stock Market:- Unpredictable and vigorous changes in price within the stock market. - It is necessary for some movement within the market in order to sell commodities, - however a volatile market represents the most risk to investors

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3. Current account deficit:- A current account deficit occurs when a countrys total import exceeds the total exports. - not good for the country - Indias current account deficit now is more than the projected level

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4. High gold prices:- Very high prices for gold have created panic among investors - The fear of bubble bursting in gold has resulted in investors viewing dollar as a safe currency

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5. Price of crude:- tremendous stress on the Indian Rupee - Globally, the price of oil is quoted in dollars - domestic demand for oil increases or the price of oil increases in the international market

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6. Interest rate difference:- Higher real interest rates generally attract foreign investment - slowdown in growth there is increasing pressure on RBI to decrease the policy rates - foreign investors tend to stay away from investing

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7. Inflation causing rupee depreciation:- decrease the purchasing power - The inflation rate in India was recorded at 4.86% in June of 2013.

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8. Fundamental law of economics:- demand for the dollar in India > supply, the dollar appreciate and rupee depreciates. - created by importers- requiring more dollars to pay for their imports - Foreign Institutional Investors- withdrawing their investments and taking the dollars outside India

The rope that can pull INR out

Measures By RBI:

- Using Forex Reserves - Raising Interest Rates - Make Investments Attractive- Easing Capital Controls
Measures by Government: FDI