Essay about Deprication of Indian Rupee

3337 Words May 28th, 2014 14 Pages
The Indian Rupee Crisis Economics Essay-1
In this paper we are going to examine the cause and the impact of rupee depreciation on the Indian economy. Since last few months Indian rupee came under great stress as overseas investors are paring their exposure to Asia’s third-largest economy amid international uncertainty and mounting worries over the domestic economy. In 2009 – 2010 the exchange rate was hovering around the 43 – 45 rupees per US Dollar level. And now it is around 55 – 56 levels, the main reasons to examine are increase in import bill, higher inflation, fiscal mismanagement and all resulting in higher cost of borrowing. The rupee has lost more than 15% of its value this year, making it one of the worst performing currencies
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It shows how the trend of the Indian rupee has been from 1991 to 2011 & the main reasons behind the fluctuations in the Indian Rupee.
After determining the reasons behind the fluctuations it talks about the depreciation in the Rupee against the Dollar over the last financial year (2011-12). Basic reasons identified in the paper are:
Persistent Inflation
Persistent Fiscal Deficits
Lack of Reforms
Global Economic Scenario
After the reasons of the downfall are determined, policy measures* have been identified in order to control the depreciation of the Indian Rupee. Moreover the role of RBI has also been identified as to what all measures can be taken by them to curb the situation.
Rupee Exchange Depreciation: Impact Analysis available at http://www.assocham.org/arb/general/Rupee_Exchange_Depreciation_Impact_Analysis-2012.pdf (Accessed on 8th October 2012).
This paper assesses the impact Indian Rupee Depreciation have had on different sectors of the Indian Economy. It mainly takes into account the imported goods as the main areas which have been impacted by the fall in the Indian Rupee against the US Dollar.
India is poor in oil resources and is heavily dependent on coal and foreign oil imports for its energy needs. Thus, oil imports & other imports form a major source for India when it comes to its energy requirements. Other imported products are: machinery, gems, fertilizers and chemicals. Main import partners are European Union, Saudi

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