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Weakening Indian Rupee, impacts of currency devaluation in India.BY: money | Category: Business and Finance | Post Date: 2008-09-25
Why is Indian rupee weakening?
This is a very important question in this current scenario. Not even Indian currency, all the Asian currencies are going down. They have started to doubt their strength.
What is the reason behind this? This is like a very talked about question. If, we try to find, we can easily find lots of reasons will come out.
If we compare the rupee with dollar it has come down at their 2 year low. The declining rupee is affecting the economy. Indian companies are losing huge chunks money. Many companies have recorded mark to market losses running on their foreign currency liabilities.
Indian reserve bank of India has started to sell dollars but it is not making any difference. Demand of dollar is so high that it is not easy to control their appreciation. Oil companies have to make their payment in dollars. They are making huge demand of dollar.
Leave this all these things; Reserve / central bank has no command over declining prices of rupee. The rupees saw their biggest fall in a decade on 16th September. It reached around 47 levels. It was the biggest single day fall in a decade.
The impact of weakening rupee share market is also in turbulence. Investors have started to think on strength of the economy.
When this weakness will come to an end, it is not very clear. But this is not an indication of a strong economy. People are in hope that it will take some time to be settled down.
If we will see the reality of whole economy, then we can understand the problem. The kind of volatility is being seen everywhere, means recession has come.
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