The Indian Rupee Crisis Economics Essay-1
In this paper we are going to examine the cause and the impact of rupee depreciation on the Indian economy. Since last few months Indian rupee came 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. In 2009 – 2010 the exchange rate was hovering around the 43 – 45 rupees per US Dollar level. And now it is around 55 – 56 levels, the main reasons to examine are increase in import bill, higher inflation, fiscal mismanagement and all resulting in higher cost of borrowing. The rupee has lost more than 15% 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. This paper will firstly discuss about the economy of currency to give an overview of the problem and the factors related to it.
Afterwards it will be examining the causes of the Indian rupee depreciation with respect to the Indian economy and the global economy. And after that it will analyse the impact of the same on trade and business. Finally, recommending the policy actions in response of the falling currency.
II. LITERATURE REVIEW:
These papers include the work which have been used as a basis or reference for formulating the policies regarding ‘The Indian Rupee Crisis’.
Singhal, Shelly (2011), “AN ANALYTICAL STUDY ON INDIAN CURRENCY RUPEE DEPRECIATION AGAINST THE US DOLLAR AND ITS ECONOMIC IMPACT”, Arth Prabhand: A Journal of Economics and Management, Vol.1 Issue 1, April 2012, Pp. 73-83.
This paper mainly takes into account the Indian Rupee Crisis mainly during the last quarter of 2011 & the impact it had on the Indian