Question

Why is Rupee falling?

Answer 1

rupee is falling because the other currencies like dollar,euro ect.are gaining strength.

Answer 2

the major reason of rupee's depriciation is that the imports in our country is higher than the exports. As u can refer to Economic Times a couple of days back there was a front page news on growing trade deficit between india & china. Currently india imports $ 43.2 bn from china and exports $ 19.1 bn. So, there is a deficit of round about $ 23 bn which is approx. 160% of exports.

Now, you will be having doubt that what export & import has to do with falling rupee?

See every country has its Forex reserve. As imports is increasing so u will need to pay for the commodities that u have purchased from foreign country for that u will have to exchange Indian Rupee into Foreign currency from the available FOREX reserve of the country. Thus it means that the FOREX reserve will decrease hence the Purchasing Power of the Country from Foreign country will decrease hence the Fedral government will try to increase the FOREX reserve to fulfill the demand of Foreign currency. In this process the government will start purchasing higher amount of Foreign currency that will result in higher price of foreign currency.

Thus in short u can say that the Balance of Payment is not neutral, basically it is assumed that a country should have equal amount of import & export. BOP is difference between exports and imports.

I feel it will help u lil bit although if u find some difficulties u can ask me..........

Answer 3

wow Sheg this is awesome piece of Information

Answer 4

its ok u are free to ask me any question anytime
welcome :)

Answer 5

Rupee falling bcz doller outflow through FII chennal and high domestic demand of crude oil build up dollar flow and sept GDP rate fell put Rupee weak.

Answer 6

and that is the very basic reason why government of India is allowing FDI in retail sector so as to imporve BOP.

Answer 7

Hmm Interesting Thanks

I support FDI in Retail btw