Rupee Loses Value: Domestic Economic Slowdown Is To Blame

The Indian Rupee value has tanked to about 20% of its value in the last one year. The current exchange rate trends and analysts investigating the matter frantically have indicated that there is a possibility that further drop in value of the Rupee against the Dollar is foreseeable unless the Euro recovers. With the looming Euro zone crisis and its recovery being touted as unlikely in the near future, the Rupee’s fate is now internationally dependent. With the government prompting RBI to look into the matter, the helplessness of the Central financial authority is not just amusing but brings stark realities of Indian economy to light especially when contrasted with the robust Chinese Yen which turns out to be financially independent of the international economic crisis and hence sustainable on its own. Of course, this is not without isolative disadvantages evident in its poor international demand.

The current crisis is being explained in heavy jargon that not many understand but the underlying facts are understandable to anyone who analysis the Rupee dip critically. Essentially, the Indian Rupee is linked to the international markets through a variety of exchange rate dependent currency markets. The trade and commerce which involves exports of surplus and imports of deficit commodities in India is managed through the economic value dependent relationship between the Rupee of India and the currency with which it is traded with. These relationships can prove to be highly important when money is being traded. For example, it becomes hard for students at International universities from India to manage with parents sending money abroad as the rate depreciates the exchanged value to almost peanuts. While people sending money from abroad to India make hay while the Rupee value stays low by sending money to their parents and loved ones.

There happens to be another burning question that arises with reference to the Rupee value crisis. With the domestic politics riddled with corruption and agitations thriving to bring defaulters and fraudsters to justice, the dip in Rupee value can be rumored to be easing the flow of foreign money into Indian bank accounts so that, if at all anyone is put behind bars they can show that their money was in India and not in some Swiss bank account. What would you take on this issue be?

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