Why The value of India Rupee is Falling continuously? What can be done to stop it?

 The Continuous fall of Indian Rupees

Recently The Indian Currency that is the Indian Rupee crossed the 80 rupees mark against US dollar, that means that 1 US dollar is equal to almost 80 Indian rupees which is a huge depreciation of the value of Indian Rupees. In this blog we will see the reasons for this depreciation or fall of Indian rupees and how India can stop its depreciation.

Let’s see the reasons for continuous fall of Indian Rupees:

Ukraine war:

Due to the Ukraine war the cost of fuel and other commodities went high which led to inflation and depreciation of value of India rupees. Since the start of the Ukraine war the value of major currencies around the world depreciated. Country wise list of depreciation of major currencies are mentioned below:

Hong Kong dollar= -0.64 percent

Yuan: -4.69 percent

Rupee: -6.69 percent

Euro: -7.72 percent

Japanese yen: -17.12 percent

So we can clearly see that most of the advanced countries have also experienced depreciation in their value. Price of fuel highly impacts the prices of goods all over the world, hike in prices means inflation  and inflation results into depreciation of currency.

Huge Trade deficit of India led to fall of Indian rupees:

In the year 2021-22 the trade deficit of India was 189.5 US dollar which is huge number. Trade deficit is the deficit in trade, for example when a country imports more and exports less then trade deficit occurs .When a country imports less and export more, it experiences a trade surplus and the value of its currency also increases. Trade of a country highly effects its currency value. As a country imports more, its currency goes into the market and hence gets devalued. The more a currency flow into international market the less the demand goes of that currency. Same thing happened to Indian Rupee also.

The only solution of it for India is to export more and import less. India have to become an export hub like China. Currently India is nowhere near to become an export hub and hence the value Indian Rupee will keep falling.