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Because of many factors that are occurring in a simultaneous fashion. The crucial ones are:
1. Due to Risk Aversion on the part of Currency Investors, the Demand for the US Dollar has gone up world over
2. Uncertain Economic Situation around the globe
3. FII's turning Net-Sellers and withdrawing funds from the Indian Market
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Why did the Indian Rupee depreciate so much against the US Dollar?
The availability or rather the supply of the US Dollar in the Indian markets is pretty limited. Because of uncertainty in the global economic scenario, foreign investors (especially from USA) have turned net-sellers and USD Inflows into the country has fallen sharply. The US dollars into the Indian economy by the FII's (Foreign Institutional Investors) not only guides the movement of the Indian Stock Markets, it also is a potent force that can determine the exchange rate movement of the Indian Rupee. The synopsis of this FII situation is as follows: "If there is a net inflow of money (USD) from FII's the rupee strengthens or appreciates against the US Dollar. When there are net outflows, it depreciates" For Example: During 2010, there were record inflows of funds from FII's into the Indian system and hence the Rupee was very strong. Remember the days when the Rupee was around 42-43 rupees per US Dollar??? Now in 2011, FII's are withdrawing their funds and hence the value of the rupee is depreciating
What is rupee appreciation and rupee depreciation?
Rupee is the Indian currency. Just like any commodity the Rupee also has a price, the value you pay to exchange a rupee. The US Dollar being the predominant currency, all prices of currencies are generally quoted in Dollars. Hence in case of the Rupee, its price at any point in time maybe say, Rs.45/$ (determined through various aspects such as forex reserves, FDI inflows, rate of interests and so on). With the change of the indicators the value of the rupee as per the dollar changes. When the rupee becomes dearer i.e. say Rs.40/$ it is said to have Appreciated (Value) in the reverse case say Rs.50/$ then the Rupee Depreciates (Value). Rupee changes values for a range of reasons, like if US performs very well then people will demand more US dollars, exchanging their rupee. This Demand will raise the price of the US dollar and hence depreciate the Indian Rupee.
What are the reason for decline value of Indian rupee in foreign exchange market?
There are so many reasons of depreciating rupee, but I would like to explain the first one, which is most important.Why dollar is moving up and rupee is going down? There has been a recent fall in rupee since some days ago and a dramatic increase in dollar. It was 49.50, then 50.12, 51.10, 52.60, 53.54, 54.40, and yesterday it was 55.32 and today according to google search 1 U.S. dollar = 55.5987991 Indian rupees. Why is this happening?First Reason - Dollar is in DemandBRIC countries like India have emerging economy, so a huge percentage of investment in India is from outside the country, especially from US but due to recession in US, big institutions are collapsing and many of them are on the verge of breakdown. They are suffering huge losses in their country. They have to maintain their balance sheets and look strong on all statements, so to recover losses in their country, they are pulling out their investments from India. Due to this pulling out of investment by these big companies from India or in other terms disinvestment, demand of dollar is raising up and rupee is depreciating.There was a huge interest rate differential between India and US. Now RBI is reducing all kind of rates to increase money supply in market, so deposit rates will also move downwards. It will reduce the rate differential between two countries and affect the fixed investment in India in a negative manner.Second reason - Collapse of International TradeIf you observe in terms of international trade, commodity prices are crashing at international level.Importers are trying to accumulate dollars, as they have to pay in terms of dollars and at the end demand is increasing against the rupee. This has not happened yet due to lack of confidence in all kind of markets.Exporters have a very few orders from outside countries, so there is no matter of converting dollar into rupee thereby decreasing demand for rupee.Besides the above-mentioned two reasons, there are many other reasons, which I would like share in the comments section below with you and others.Now 1 USD is at 55.59 Indian rupees and expected to appreciate further due to huge inflows. The major gainers are Indian IT companies including BPOs, call center outsourcing, medical transcription outsourcing, and Indian content writers, especially Indian Adsense publishers who also earn in dollars.regards- IV chennai
When do Indian Rupees get strong compared to US Dollar?
The exchange rate is a relative. So the Indian Rupee will get stronger (the rate will go lower) when the PERCEPTION of economic fundamentals are positive for India verses the PERCEPTION of fundamentals for the US. There is another factor which is 'flight to quality'. There is a (false I believe) perception that the US is 'safe' and s, in times of uncertainty, people will gravitate toward the safety of the US Dollar. here is a similar perception held for gold.
What is wrong with gas prices today?
Gas prices are rising because the American dollar is depreciating (assuming you live in the United states) and we are completely Dependant on gasoline Unlike food, there are no alternatives to what we use to power our cars, so gas companies can, for the most part, charge whatever they want.
Why did the Indian Rupee depreciate so much against the US Dollar?
The availability or rather the supply of the US Dollar in the Indian markets is pretty limited. Because of uncertainty in the global economic scenario, foreign investors (especially from USA) have turned net-sellers and USD Inflows into the country has fallen sharply. The US dollars into the Indian economy by the FII's (Foreign Institutional Investors) not only guides the movement of the Indian Stock Markets, it also is a potent force that can determine the exchange rate movement of the Indian Rupee. The synopsis of this FII situation is as follows: "If there is a net inflow of money (USD) from FII's the rupee strengthens or appreciates against the US Dollar. When there are net outflows, it depreciates" For Example: During 2010, there were record inflows of funds from FII's into the Indian system and hence the Rupee was very strong. Remember the days when the Rupee was around 42-43 rupees per US Dollar??? Now in 2011, FII's are withdrawing their funds and hence the value of the rupee is depreciating
How much is today's American dollar in rupee?
One dollar is equal to 46.19 Indian Rupee, 83.48 Pakistani Rupee, and 114.38 Sri Lankan Rupee
Is the stone Indian money worth anything?
Yes 1.00 Indian Rupee = 0.0255 U.S. Dollar conversely: 1 dollar = 39.175 Indian Rupee Conversion rates fluctuate, so you need to check it on the day you convert it, if you do.
What is the Total salary of subedar in army in Indian army?
100 rupee so small! :-)
Is rupees a proper noun?
The noun rupee (plural, repees) is a common noun.
21200 INR means how much in Rupees?
INR is the currency code for Indian Rupee, so the answer is 21,200.
What currency does Mumbai Have?
As Mumbai is a part of India it is Indian Rupees (INR)
Why does an Indian burn so badly?
because you are using friction or fire
Why does an Indian burn hurt so badly?
because you are using friction or fire
What much is ten dollars in Indian rupee?
One USD = Rs. 50/- (Approx) So 10$ = Rs. 500/-
What is rupee appreciation and rupee depreciation?
Rupee is the Indian currency. Just like any commodity the Rupee also has a price, the value you pay to exchange a rupee. The US Dollar being the predominant currency, all prices of currencies are generally quoted in Dollars. Hence in case of the Rupee, its price at any point in time maybe say, Rs.45/$ (determined through various aspects such as forex reserves, FDI inflows, rate of interests and so on). With the change of the indicators the value of the rupee as per the dollar changes. When the rupee becomes dearer i.e. say Rs.40/$ it is said to have Appreciated (Value) in the reverse case say Rs.50/$ then the Rupee Depreciates (Value). Rupee changes values for a range of reasons, like if US performs very well then people will demand more US dollars, exchanging their rupee. This Demand will raise the price of the US dollar and hence depreciate the Indian Rupee.
What is the difference between one rupee note and other Indian rupee notes?
on rupee notes no longer exist,,,the value of rupee over years has been so diluted that it costs much more to print or mint the small denominations like 1-2-5 rupees- that in a lot of places you are handed over candy instead of change....just like that
