INR trades at 60, Why Rupee is falling ?

By | June 20, 2013

At last INR reaches our target of Rs 60 makes a high of 59.94 as discussed on 13 May Post.

Technically we achived the target but what are the fundamental reasons which are driving Rupee price lower each passing day.

Dollar got Boost from FED Decision

The Fed said on Wednesday that it expects to wind down its bond purchase program by mid 2014. The Fed expects US unemployment rate to come off to 6.5% to 6.8% levels in 2014 from current levels of 7.6%. US economy is forecast to grow in a range of 3% to 3.5%. Inflation expectations are down with the Fed’s core inflation measure the Personal Consumption Expenditure (PCE) being forecast at 1.5% to 1.8% from earlier expectations of 1.7% to 2%.

Dollar got a Boost from Fed as once and is trading at 2 year high.

 

No Green Shoots in Indian Economy

Indian Economy is still not out of woods, Consumer and Food Inflation is still at Highs, Fiscal Deficit is large, IIP is almost flat and Growth concerns still lingers.Outflows from equity markets have added to concerns about the funding of the current account deficit. Foreign fund selling in Indian equities have picked up pace to add to the huge sell-off in debt markets.

India is net Importer of OIL and GOLD, with fall in GOLD prices Indian consumers are buying more gold which is increasing the gap between Import and Export  and thus we are having a huge current account deficit and it putting more pressure on Rupee.Fiscal deficit has increased to 20 Billion Dollar when compared to last year.

 

Euro Zone/China Recession

Eurozone is still battling with recession, Imports are coming under pressure as due to almost nil growth in Eurozone, China PMI output which came today was signalling a slowdown.

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