Ten Reasons Why Rupee Is Sinking Each Passing Day

New Delhi: Here are 10 main reasons which experts feel are responsible for the Indian rupee -- which has depreciated as much as 16 percent this year -- to touch new lows each passing day:

Widening Current Account Deficit: This is resulting in creating more actual as well as speculative demand for the dollar and other convertible currencies.

Policy Inaction: Perception of lack of clarity on policy front is also fanning speculative demand wherein the Reserve Bank of India (RBI) on one day said it will tighten liquidity and on yet another said it will inject $1 billion in the market.

Low Forex Reserves: India's foreign exchange (Forex) reserves are enough to cover imports of seven month only. The forex reserves have declined in the recent months. Due to low reserves, the RBI can't intervene aggressively in the currency markets.

Economic Growth Slowdown: India's gross domestic product (GDP) growth fell to a decade low of 5 percent 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.