Friday, 30 August 2013

Why value of Indian Rupee is decreasing ?

With every passing day Rupee is making new lows but for a common person it is not easy to understand the reason behind this steep fall and he keeps on asking himself a question 'Why is rupee depreciating? and the effects of the decreasing value of Rupee, which we have already explained you in earlier post.

Now we will try to give you the answer of questions like why indian currency is weak, why indian currency is falling down, why indian currency is depreciating?, why is rupee depreciating? and many more . So here are the Five reasons of decreasing value of Rupee.


1. Difference in the demand and supply of Rupee in currency market - Understanding currency market is not a rocket science, here only simple economic law works, more demand means more price for the product and less demand means less price. According to that law the demand of Rupee is decreasing hence the price of Rupee is also decreasing. Simple isn't.

2. Foreign Investors snatching their investment out of India - Foreign investors play a important in providing liquidity to capital market and boosting the economy of any country, it is similar for India also as our economy depends largely on them but foreign investment in India has decreased steeply in last year due to which value of Rupee decreases.

3. Lots of scams which faded the image of India in the world -  Country has seen lots of scams revealed in recent times which decreased the reputation of the country in the world. Corruption in the country is increasing, huge negativity among the people for the Govt  has reduced the trust of Foreign Investors in India. All the bills are hanging in the Parliament. Govt is not stronge enough to take bold steps for the growth of the economy.

4. Decreasing GDP growth reduce the investment opportunities in India - Before the Recession of 2008 India has maintained GDP growth rate of close to 9% for many years but things have changed now IIP numbers are lowering and even showing negative growth also the inflation numbers are scaring the growth but Govt is not able to bring any policies to restore the growth. Rising Fiscal deficit makes future more gloomy. Investors are not seeing their investment growing much here.

5. Economic problems in different countries make Dollar a better Investment - Many countries are facing huge economic problems and facing financial crisis, countries like Greece, Spain are breaking. Investing in US is better option in compared to emerging markets like India where growth is slowed down which increases the demand for Dollars making then more pricey.

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