India: Sinking or Shining?

Downfall of Rupee

The Depreciation takes place when the value of the Indian currency reduces to that of U.S. dollar which is the result of trade deficit that has recently increased up to 56 percent. This deficit has increased because the import bill that was estimated by the two items that is crude oil and gold has become higher than the exports. One of the reasons for the decrease in the demand of exports in the West, is that the Great Recession. Despite the recent depreciation many of the country’s exportable products are still not competitive enough for the Asian markets. This fall in the value of the rupee has forced the foreign investors to back off from the stock exchanges which resulted in the decline of share indices. Most of the foreign investors are investing in their home countries and other domestic industrialists wish to put money in the foreign countries. The increase in price of the petroleum that is imported is adding to inflationary pressures.