Case Study

APJEM 

Arth Prabhand: A Journal of Economics and Management    Vol.1 Issue 1, April 2012, ISSN  

AN ANALYTICAL STUDY ON INDIAN CURRENCY RUPEE DEPRECIATION AGAINST THE US DOLLAR AND ITS ECONOMIC IMPACT

SHELLY SINGHAL*

*Maharaja Agrasen Institute of Management and Technology, Jagadhri, Haryana, India.

ABSTRACT The Indian rupee is under great stress as overseas investors are paring their exposure to Asia’s third-largest economy amid international uncertainty and mounting worries over the domestic economy. The exchange rate between the Indian Rupee and the US Dollar has gone over the roof. In 2009 – 2010 the exchange rate was hovering around the 43 – 45 rupees per US Dollar level. Over the past one year, the rupee has consistently depreciated against the dollar with the last quarter of 2011 (calendar) being one of the worst in terms of Rupee Value Depreciation. On November 21 alone, overseas funds sold more than US$500 million worth of Indian-listed shares over the five trading sessions, reducing net inflows for 2011 to under US$300 million – a tiny sum compared with the record investments of more than US$29 billion experienced in 2010. The rupee has lost more than 10 percent of its value this year, making it one of the worst performing currencies in Asia. This paper reviews the probable reasons for this depreciation of the rupee and the outlook for the same. It also reflects on the policy options to help prevent the depreciation of the Rupee. KEYWORDS: Rupee Depreciation, Exchange Rate, Economic Impact. ______________________________________________________________________________             Pinnacle Research Journals                   74       http://www.pinnaclejournals.com                                                                                        INTRODUCTION If we look at India’s Balance of Payments since 1970-71, we see that external account mostly balances in 1970s. Infact in second half of 1970s there is a current account surplus....