Monday 22 July 2013

Why value of rupee is decreasing against dollar value?

Do you know why the value of rupee is decreasing
against the dollar value ? What Market forces
determines the exchange rate of money ? Lets
discuss them :
As India is an emerging economy, lots of investing
is coming outside from the country and when
more money is getting invested, the demand of
currency will be up so the and rupee value will be
increased against dollar. But when investors are
pulling out their investment the demand of
currency will go down and so the value of rupee
will decrease against dollar. It was a normal
example just to make this concept
understandable.
Then Inflation is also a factor for exchange rate
value. If any country has a low inflation rate then
its currency value increases. As we have seen
reduction in currency values for those countries
which have higher inflation rates.
Difference in Interest rates is also a factor that
affects exchange rate value.
Trade Factor means exporting and importing ratio
is also a major factor for this. If a country is
exporting more in monetary values then it is
importing then it will be generating more
revenues from exporting. But if increase in rate of
export is lesser than rate of import then value of
its currency decreases with trading countries.
Economic conditions and Political stability also
matters for exchange rate value.
These are the major factors which
affects the exchange rate of money or currency.
Why value of rupee is
decreasing against dollar
value

No comments:

Post a Comment