Reasons Behind Indian Rupee Depreciation Against Us Dollar

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[size=4]One of the most visible signs of a strong [url="http://dartconsulting.co.in/"]economy[/url] is a stable currency. Indian Rupee has been stable for most of the 2000s which gave an impression that all is well with the fast growing economy. However, it has[url="http://dartconsulting.co.in/"]depreciate[/url]d significantly against the US Dollar in 2011. Very few financial experts have predicted this kind of a downfall for the Indian Rupee. It has lost more than 20% of its value in 2011. Rupee is trading close to Rs 54 to a US Dollar now. Indian Rupee is now one of the worst performing currencies in the world. The rupee’s decline is based on the expectation dollar demand will remain strong due to worries over the euro zone debt crisis.[/size][/size][/font][/color]
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[size=4]The Reserve Bank of India has, so far, responded to the depreciating rupee with minimal intervention in the[url="http://dartconsulting.co.in/"]market[/url]. One of the reasons is that country’s foreign exchange reserves of $300+ billion may not be enough to defend the rupee, especially when the intervention comes as a reaction to global factors. While exporting industries such as information technology, gems and jewelry, and textiles will be happy, consumers are likely to suffer. The higher cost of imported inputs across a range of products will cause an increase in their end prices, especially in the case of fuels.[/size][/size][/font][/color]
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[size=4]The reasons for this downfall are many. India’s growing trade deficit, global slowdown and global investors’ preference for gold and US$ for safe investments, poor returns from Indian stock market (BSE Sensex lost close to 25% in 2011) are some of the reasons for this downfall. To reverse this trend, India needs to put some key [url="http://dartconsulting.co.in/"]strategies[/url] so that the demand for Indian Rupee increases in the [url="http://dartconsulting.co.in/"]forex market[/url]. These strategies will take longer term to take effects and are good for the overall economy in the coming years. Some of the probable[url="http://dartconsulting.co.in/"]strategies[/url] are:[/size][/size][/font][/color]
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[size=4]• Increase exports: Depreciation of the rupee with respect to the dollar has made Indian products competitive in the [url="http://dartconsulting.co.in/"]global market[/url]. Hence increasing the exports is an viable option for the [url="http://dartconsulting.co.in/"]Indian companies[/url][/size][/size][/font][/color]
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[size=4]• Reduce external borrowings: According to data from the RBI, ECBs in January-September 2011 were 28.7 billion US dollars. Foreign borrowings increased as domestic interest rates became expensive due to monetary tightening by the RBI. The average rate of interest in India has been significantly higher than in [url="http://dartconsulting.co.in/"]international market[/url] encouraging Foreign Institutional Investors to borrow in foreign markets where interest rates are lower. India needs to reduce dependence of the external borrowings to increase demand for its currency[/size][/size][/font][/color]
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[size=4]• Reduce imports: The cost of importing oil contributes to a major share of India’s imports. Increase in prices of oil and other commodities lead to rise in inflation. The rise in inflation leads to further outflow of capital. Further, crude oil and vegetable oils are the two major commodities in which domestic consumption demand is largely met through imports. India needs to aggressively invest biofuels to reduce dependence on fossil fuels. While this is a long term strategy, this could be a way to go for the future governments in India as far as fuel policy is concerned. Further in the case of vegetable oils, India with its vast agricultural land should [url="http://dartconsulting.co.in/"]promote[/url] growing oil seeds which can lower its vegetable oil import bill.[/size][/size][/font][/color]
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[tom bhayya]

increase exports and reduce imports antha easy kaadhu

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[quote name='Alexander' timestamp='1325657847' post='1301235426']
increase exports and reduce imports antha easy kaadhu
[/quote]


mari em cheddam

[kingmakers]

idhi anta kadu kani dollar value inka pergutundha ledha ??????/

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[quote name='KINGMAKERS' timestamp='1325657886' post='1301235434']
idhi anta kadu kani dollar value inka pergutundha ledha ??????/
[/quote]
hehehe dollar value peragadu.. rupee value padutundi mostly may be can touch 56

[kingmakers]

[quote name='Gona Ganna Reddy' timestamp='1325657973' post='1301235443']
hehehe dollar value peragadu.. rupee value padutundi mostly may be can touch 56
[/quote]

[tom bhayya]

[quote name='Gona Ganna Reddy' timestamp='1325657882' post='1301235431']


mari em cheddam
[/quote]

em cheddham.. kandidham... manam manufacturing lo eek, china ki competition no way.. inka india lo agriculture paristhithi thelisindhey... oil imports thappavu...

[dooda]

oil..oil..oil...mana vallu eppudu invest chestaro biofuels meda.......appudu mana desam sagam bagupadinatte..

[k2s]

[Deletedid1]

[quote name='Alexander' timestamp='1325658122' post='1301235456']

em cheddham.. kandidham... manam manufacturing lo eek, china ki competition no way.. inka india lo agriculture paristhithi thelisindhey... oil imports thappavu...
[/quote]

poorti ga chadivava article.. most are the imports are crude oil...

[dooda]

[quote name='Gona Ganna Reddy' timestamp='1325657973' post='1301235443']
hehehe dollar value peragadu.. rupee value padutundi mostly may be can touch 56
[/quote]

kingu ke satire vestava...

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[quote name='KRISH01' timestamp='1325658217' post='1301235467']

kingu ke satire vestava...
[/quote]

ee veyyakudada... ese hakku DB lo naaku bemmi ki ma bodi linganike undi

inkodevadanna vese taatha teesta

[kingmakers]

[quote name='Gona Ganna Reddy' timestamp='1325658316' post='1301235477']

ee veyyakudada... ese hakku DB lo naaku [size=6]bemmi[/size] ki ma bodi linganike undi

inkodevadanna vese taatha teesta
[/quote]

new year roju phone cheste lift kuda cheyaledu bava

[ganesh]

[dooda]

[quote name='Gona Ganna Reddy' timestamp='1325658316' post='1301235477']

ee veyyakudada... ese hakku DB lo naaku bemmi ki ma bodi linganike undi

inkodevadanna vese taatha teesta
[/quote]