Rupee has been weakening since 1st of May, 2013, and has reached its retirement level at 60 per USD on Thursday, June 20, 2013 and finally closed at all-time low of 59.57 against US Dollar
Falling rupee is creating a pressure over the Sensex and also the end users will be the sufferers of growing prices of the commodities and their daily needs. A major reason behind the strengthening dollar against rupee is increasing demand for dollar in the world economy for import-export by other countries worldwide. Slow pace of Indian Economy and government’s inability to generate profitable capital inflow is also the reason for weakening of rupee. Importing goods like oil and gold from foreign countries have increased owing to their demand in the domestic market causing rupee to turn weak against USD.
As per the experts views the weakening of rupee against Dollar is because of the United Progressive Alliance (UPA)
Government, which is unable to generate heavy capital inflows like it had done in September 2012 to get rid of India’s loss on investment grade credit rating.
“The value of a currency depends on factors that affect the economy such as imports and exports, inflation, employment, interest rates, growth rate, trade deficit, performance of equity markets, foreign exchange reserves, macroeconomic policies, foreign investment inflows, banking capital, commodity prices and geopolitical conditions,” says Pramit Brahmbhatt, chief executive officer, Alpari Financial Services (India), a foreign exchange brokerage.
If rupee continues with its roller coaster ride in the near future at the same range then the days are not far when a common public be over burdened with expensive rates of commodities. Prices of oil, to FMCG products will reach its heights with the falling rate of rupee. Even vacation packages and imported electronics will become more costly. Falling rupee is going to hurt the common people in the long run in the near future. However the investors will be on a profit zone with the increasing strength of Dollar.