3 reasons why the Indian rupee crashed

The Indian upee has been in the news recently for all the wrong reasones. It has  been creating new all-time records by plunging to historic lows almost on a daily basis. It has some people worried while others say, the Indian currency is finding its natural value and is not such a big deal. And what are the reasons that have been blamed for this?  

Depreciation of rupee is mainly due to widening trade deficit, rising crude oil prices and strong revival of the US economy, PHD Chamber of Commerce and Industry vice president D K Aggarwal said in the open house discussion on rupee volatility.

He, however, said deceleration in rupee is temporary as the Indian economy is resilient enough to withstand the external shocks on the back of strong macroeconomic fundamentals and well supported dynamic policy environment.

"International market volatility, increasing trade protectionism, depreciating international currencies including weakness of Chinese Yuan and rise in crude oil prices have put pressure on Indian rupee in the recent times," Aggarwal said.

India's trade deficit (merchandise) increased from around USD 89 billion in 2007-08 to USD 162 billion in 2017-18. 

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"For the current year, India's trade deficit increased to around USD 63 billion in April ? July 2018-19 as against USD 52 billion in the corresponding period of last year," it added.

The industry body said that the common view of the open house discussion is that the average value of Rupee against USD for the current financial year 2018-19 is expected to remain in between 68 to 69 per USD.

Time is most opportune to increase our exports and the Government at this juncture should remove vulnerabilities in exports such as speedy refunds of exports and motivation to low cost labour intensive exports such as food processing, textiles and leather, Aggarwal added.