Reasons for Rupee falling down with respect to Dollar

It is 28 August 2013 and the value of the rupee has reached its all time low i.e. 1 Dollar equal to 68 rupees.  Let us find out why this value is sinking down and what are its effects.

Reasons for Rupee Falling down:

(1) More Import Less Export: India has to import large numbers of petroleum products and the other high technology products like weapon etc. It has a constant increase in the rater of buying the Gold since last few years. For buying the product it has to pay Dollars and if the rater of buying is more than selling than the price of the Dollar will keep rising. India is an exporter of the raw materials like cotton, tea etc. but it has to buy the high technology products from the foreign.

(2) Less Foreign domestic investment: The foreign domestic invest is less and if it can be increased that the investors would have to buy the money to invest in here thus it may rise the rupee. For it Government and the people of this country has to understand the ways to attract the foreign domestic investment.

(3) Rate of inflation rate in India higher than that in USA:

If the inflation rate in India is higher and has raised with larger percentage as compared to the inflation rate in the USA it directly rises the value of Dollar as compare to Rupee.

(4) Govt. Budget Loss: At the end of the budget year Govt. produces a report and we can find if the budget is in loss or in profit. If the amount of the expenditure is more than the amount of returns  then the budget is in loss, so Govt. has to borrow money from the market. Government also raises the taxes on the things and thus increases the internal value of money and people have to pay more Rupee to the same cheaper things earlier. 

(5) Black Money: There are some transactions which do not take through the banks. They have bought the Dollars and kept them somewhere so there is a pseudo deficiency of the Dollar in the market and there by increase in the price of Dollar. 

Now if we see at these  reason one can easily assess that the price of the Dollar is constantly going to rise and we have to just watch it going up, until Govt. takes some concrete steps to attract the foreign investment in the country. 

Reference:  http://www.boddunan.com/articles/business-finance/22753-some-reasons-for-falling-value-of-rupee-vs-dollar.html