Ten Reasons Why Rupee Is Sinking Each Passing Day

Dependence on Foreign money: India's current account deficit was financed by foreign money for the last many years. Withdrawal of money by overseas investors is leading to the weakness in the rupee.

Recovery in the US: The slow but steady recovery in the US is making the greenback stronger against other currencies.

Stimulus Withdrawal: Indications that the US may withdraw or ease the fiscal stimulus package that has been on since a few years ago to tide over the economic crisis there, could potentially put the brakes on funds for developing economies.

Capital Controls: The decision by the Reserve Bank and the government to impose temporary restrictions on capital flows has not gone down well with the markets, as it will not only discourage Indian companies from investing abroad, but also foreign firms from pumping money into India.

Trends in other markets: The rupee is also following the trend seen in the currencies of other emerging economies such as Brazil, Indonesia, Russia and South Africa.

Speculative Trading: Speculative trading in the currency markets is putting further pressure on the Indian rupee.