Why is Rupee hitting lows day by day - Detailed Story
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Why is Rupee hitting lows day by day - Detailed Story

Author: Kriti dheer calender  17 Oct 2018

Why is Rupee hitting lows day by day - Detailed Story

Value of rupee 
In the present scenario, India is the world’s fourth-largest economy. In India, Rupee is the unit which decides the value of everything but what is the value of rupee?  How the value of rupee is decided? And how is it functioning in market forces raises an important question?  
To get the answer of all these questions is it necessary to know that the value of rupee is directly in relation with the Foreign Exchange Reserves. The more the reserves; stronger is the value of rupee. It is the call of demand and supply like any ordinary good; if there is more demand of dollars in the currency market, the dollar being the strongest monetary unit, the rupee price of the dollar will go up or the rupee will depreciate. And here the supply refers to the exports and investments; these exports are the powerhouse for the country’s foreign reserves. And according to the stats of foreign reserves; it has been degrading day by day which is hitting hard on the value of money in the international market.

The present condition of rupee

Indian rupee is breaking all the old and fresh records of rupee low; it has slipped to 74.48 to a U.S. dollar. The situation is so critical that it gave space to the massive slide over 1,000 points in global stock markets in recent days. Heavy selling pressure was witnessed in banking, metals, automobile, IT and capital goods stocks. 

Even before this everyone is aware of the stretching fuel prices and rolling down rupee is increasing the difficulty of the ruling government.  All the scenario is leading the country into the flashbacks of  2013. 2013 was considered as the calamitous in terms of the value of rupee. As in 2013 between the time span of May to September rupee fell from 17%.  Similarly in 2018 rupee is slipping down from its own value.

 At that time Modi being the C.M. of Gujrat and an opposition leader had compared the loss in value of rupee with the lost of the dignity of the P.M. and the country. But today in the same scenario ministers of the cabinet are giving irrelevant statements. As in the point of view of railway minister; Piyush Goel Indian rupee is on a ‘Golden Run’ because it has only depreciated 7% in past 5 years whereas if we give a check on reality grounds then the depreciation is of 25% in U.P.A.’s governance. 

Journey of Rupee 

Money is like an organic creature; it keeps on changing with the time. The rupee was not this feeble from always in comparison of U.S. dollar. At the time of independence value of the rupee was equivalent to that of the dollar; which means that Re.1=$1. 
For the first time value of the rupee was degraded in accordance to increase the foreign investments and enhance the trade of the country and had devalued the money in 1951 to $1=Rs.4.79. Next, it was decreased by the government after wars in 1965 in urgency to improve the conditions of the country and rupee was turned down to $1=Rs. 7.57. Then in 1971 value of the rupee was linked directly with dollars and by the year 1975 rupee was demolished to $1=Rs.8.39. 
In 1991 the economy of India was on demolition and foreign reserve was at the verge of vacancy.  For stabilizing the foreign reserve again rupee rolled down to $1=Rs. 17.90 but conditions were uncontrollable. So to get control over the situation in 1993 government adopted the flexible exchange rate policy under which value of the rupee was to be decided by the market.  Since the value of rupee is decreasing from Rs.31.37 to Rs.45 in 2010 and up to Rs.63 in 2013.  

Rupee under NDA government
In 2013 BJP as an opposition party had hurled a number of charges against  UPA government. At that time rupee was at its lowest at Rs.63.13. He lambasted the Centre for not taking any steps to strengthen the currency against the US dollar. But now when he is in the same boat and rupee have touched 75 i.e. 25% more than left under UPA government he is keeping mum like always. Like always his gigantic promises were proved to be wrong.

Moreover according to the GDP growth rate record measurement by the same method shows that India had attained the maximum GDP growth rate was under the governance of Dr. Manmohan SIngh in the financial year 2006-2007 i.e. 10.08 percent.


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