The GOIs and RBIs Stand on the Falling of the Indian Rupee
Whenever there is a huge drop in the value of the Indian Rupee the government of India and the Reserve Bank of India takes necessary actions to control the depreciation of the Indian rupee. To control the falling of the rupee against the Dollar, the RBI and GOI can be seen taking some steps discussed below.
- Restricting imports of non-essential goods or increasing the import duty on the same.
- To balance the currency rates the Gold deposits can be increased.
- Promoting foreign direct investments to increase the capital inflow.
Causes Of Rupee Falling Against US Dollar And Its Effect
Whenever the value of a currency falls, it badly impacts that nation’s economy and results in a higher rate of inflation. The value of any currency falls or rises based on the demand for one currency over another. For example, if there is a higher demand for the US dollar than the Indian Rupee then the value of the Indian rupee falls against US Dollar and vice-versa. The demand for a currency is driven by the nation’s total imports and exports. Like if India imports more than it export it raises the demand for the US dollar oversupply thus resulting in a fall in the value of the Indian rupee against the US Dollar.