Depreciation of Indian Currency and its Impact on Indian Economy

The present study has to analyze the effects on Indian currency depreciation against the dollar. The study covers the area of currency growth, foreign investment and macro economic factors these are all the components to effect of currency depreciation in India during the study period from 1989-1970 to 2012-2013. The study highlighted in 2009-2010 the Indian currency exchange rate was hovering around the 43-45 rupees per US Dollar. Over the past one year, the rupee has consistently depreciated against the dollar with the last quarter of 2011 being one of the worst in terms of rupee value depreciation. On November 21 alone, overseas funds sold more than US$500 million worth of Indian-listed shares over the five trading sessions, reducing net inflows for 2011 to under US$300 million. The current scenario flow of foreign capital (Investment) to reduce when compare with last two decades. Lacking of inefficient market condition, highly dominating budget against the small traders, Balance of Payment (BOP) face the decreasing trend, high investment in gold and decreasing the revenue collection of existing foreign investors. These are all the factors to support decreasing rupee value against the dollar.