Why Did the Indian Rupee Crash?
The exchange rate of the Indian rupee has fallen to more than 70 against 1 United States dollar! This is the lowest that the Indian rupee has ever been in the past five years! This sudden slide in the value of the Indian rupee has been despite the efforts of the Reserve Bank of India to contain the fall.
The speculative bets against the rupee are too numerous for the central bank to be able to contain them. Also, activity in the derivatives markets shows that the futures for rupee are selling at even lower prices. This is hinting that this may not be the end of the fall for the rupee.
In this article, we will have a close look at some of the reasons behind the fall of the Indian rupee.
To sum it up, the rupee decline has been due to a combination of weak fundamentals which have been exacerbated by turbulent external trends. The decline is likely to continue in the short term. The government will have to take strong measures to ensure that the trend does not continue in the long term.
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