in these slides here i tried to put light on the rupee and its poor journey

2. Its a gradual decline in the value of a country currency with
respect to another country currency

4. TRADE BALANCE
IMPORT>EXPORT=DEFICIT strengthen $
 EXPORT>IMPORT=SURPLUS strengthen INR
INDIA U.S.
EXPORT $6000
IMPORT $10000
due to deficit in trade the reserve of foreign currency
going to decrease . Which directly causes the demand of
$4000 AND we need huge amount of foreign currency.
A shift in the trade balance between two countries tends
to weaken the currency of the country with greater
deficit.

5. WEALTH
Wealth is a country‘s reserves, in the form of gold, cash, foreign reserve
natural resources. Basically any factor that affects a country's ability to
repay loans finance imports, and affect investments impacts the
market's perception of its currency and the currency's value.
Less
Gold, cash,
Foreign reserve
Currency
source
U.S.
payment
$
goods
$=65.50
Gold, cash

6. Interest Rates
More interest rate More return
Low interest rate Low return
example-:
Let A has INR1000
There are 2 countries U.S. and INDIA with different I/R
U.S. with 15% INDIA with 10%
So que. where A should invest
Obviously In U.S.
Because its business all need high
return
and he will out flow it to U.S.

7. INFLATIION
Inflation reports monitor the rise of the prices of
basic goods and services in an economy, inversely
the rate at which purchase power is falling. Think
of it as a measure of how much you can buy with a
rupee.
EXAMPLE-:
if you can buy a quart of milk for INR20, after a 2%
inflation, that same quart will cost INR24. The
main cause for a higher inflation rate is a growth of
money supply without an equal growth in the
country’s assets

8. Current Account
 The current account deficit is a broader measure that
includes the trade deficit and is itself part of a
broader measure, the balance of payments.
 The balance of payments is the sum of all
transactions between a nation and all of its
international trading partners.
 In addition to the trade deficit, the current account
deficit includes factor income and financial transfers.
Balance of payments fluctuates exchange rate of its
domestic currency.

9. GEOPOLITICAL CONDITIONS
 Elections in country or in other country
 Tax policies
 Natural disasters
 Stability
 Global crisis
 Rating agencies
 Wars and attacks

10. Government Debt
 Government debt is public debt or national
debt owned by the central government.
Govt
debt
less foreign
capital
inflation
FII
open mrt selling
Fall in value
of INR

11.  The Indian currency has witnessed a slippery
journey since Independence. Many geopolitical
and economic developments have affected its
movement in the last 66 years.
 When India got freedom on August 15, 1947, the
value of the rupee was on a par with the American
dollar. There were no foreign borrowings on
India's balance sheet.
.

12.  To finance welfare and development activities,
especially with the introduction of the Five-Year
Plan in 1951, the government started external
borrowings. This required the devaluation of
the rupee.
 After independence, India had chosen to adopt
a fixed rate currency regime. The rupee was
pegged at 4.79 against a dollar between 1948
and 1966.

13.  Two consecutive wars, one with China in 1962 and
another one with Pakistan in 1965; resulted in a huge
deficit on India's budget, forcing the government to
devalue the currency to 7.57 against the dollar.
 The rupee's link with the British currency was broken
in 1971 and it was linked directly to the US dollar.
 In 1975, value of the Indian rupee was pegged at 8.39
against a dollar.

14.  In 1985, it was further devalued to 12 rupee against a
dollar.
The next round of weakness in the Rupee came in the wake
of the Bofors scam which toppled Rajiv Gandhi’s
government plunging the Rupee to new lows of
$= 12.36
 In the year 1990 this rose to $=17.50

15.  In 1991, India faced a serious balance of payment crisis
and was forced to sharply devalue its currency. The
country was in the grip of high inflation, low growth and
the foreign reserves were not even worth to
meet three weeks of imports. Under these
situations, the currency was devalued to 17.90 against a
dollar.
 To fill in this gap India borrowed large amounts from the
International Monetary Fund’s (IMF) with an obligation to
devalue the Rupee. The Rupee hit new lows with 1 US$ =
24.58 INR by the early-nineties from Rs.16.31/1$

16.  1993 was very important. This year currency was let
free to flow with the market sentiments.
 The exchange rate was freed to be determined by the
market, with provisions of intervention by the central
bank under the situation of extreme volatility.
 This year, the currency was devalued to 31.37 against
a dollar. The rupee traded in the range of 40-50
between 2000 and2010
 It was mostly at around 45 against a dollar. It touched
a high of 39 in 2007.

17.  2008-the global crises
 The Indian currency has gradually depreciated since the
global 2008 economic crisis. when sky-high home prices in
the United States finally turned decisively downward,
spread quickly, first to the entire U.S. financial sector and
then to financial markets overseas.
 In 2011- sharp drop in foreign investment, which tumbled
from $6.5 billion in June to $616 million in September.
Indian companies borrow money in foreign currencies
from outside the country because of lower interest rates.
Indian companies borrowed close to $29 billion in foreign
currencies.

18. Current account deficit was $97.9 bn

19. In 2013
 Less in flow -FDI inflows in India registered a decline of 38%, to $22.42
billion, in 2012–2013, compared to $35.12 billion in 2011–2012
 Markets were further spooked by the withdrawal of two of the largest
projects
 ArcelorMittal (MT), in Odisha
 POSCO (PKX), in Karnataka. The combined investment value of both
projects was approximately $13 billion, or about 15% of the CAD in 2012–
2013
 Record current account deficit of $88.2 billion in 2012–2013
 In November 2013, Indian inflation reached 11.24%.
 India is a net importer of oil. It has to buy oil in dollars. Therefore, rising oil
prices worsen India’s current account and also weaken the Rupee. More
Indian’s Rupee’s have to be spent on buying oil. It was $88/barrel in 2011
and by the 2013 it was $110/barrel

20. IN 2014
PROFIT-BOOKING IN INDIAN MARKETS
 The Indian markets have been witnessing profit booking. The
benchmark indices have cracked nearly 1 per cent in the
month of August so far.
Foreign funds have sold $363.48 million worth equities and
$440.15 million worth of debt so far this month, bringing down
total inflows so far this year to $25.60 billion.
 STRONG US DOLLAR
The US dollar was came strong against other currencies
on the hopes of revival in the US economy. The US
services sector surged to an eight-and-a-half year high in
July. The US index's rise beat analysts' forecasts. The US
factory orders also rose, above analysts' expectations, at
1.1 per cent in June.

21. GEO-POLITICAL TENSIONS
 Hostilities among Russia and Ukraine and unrest in
the middle-east can have a sharp impact on global
economy as they threaten to disturb global oil
market.
 According to reports, ISIS has captured a number of
towns in northern Iraq, and is close to seizing Iraq's
largest dam. ISIS now controls Ain Zalah oil field,
adding it to the four oil fields it already controls.
 Escalation of tension can lead to a sharp rise in global
crude oil prices. India is a major importer of crude oil
and demand for dollars could lead to decline in the
rupee value.

22. Have a look over how
INDIAN currency affected by
political interval?

24. RUPEE
IN 2015
&
CAUSES of erosion

25.  demand for the US currency from Indian
importers and foreign investors looking to
hedge their investments in India following the
sharp fall in the local currency.
 dollar demand was strong from state-owned
banks, likely on behalf of their public sector
clients like oil companies or for government
defense linked purchases.

26.  ON Tuesday 11 august 2015 China decided to devalue Yuan
2% against $US
 Yuan devaluation will affect Indian exporters and
manufacturers, also it will continue to keep the rupee under
pressure.
 Yuan devaluation will affect the Indian exporters because
Chinese exports in comparison become better in position.
 India has a large trade deficit with China of around $77.6 bn
in 2014-15 which is almost doubled over the last ten years.
Rupee need to depreciate to keep its exports to China and the
rest of the world competitive at a time when external demand
is weak.

27. Fears of low growth
 India has targeted an economic growth rate of 8.5% for
fiscal year 2015-16, compared to 7.2% in fiscal year 2014-
15. The World Bank forecast a growth rate of 7.9% for the
economy
 If good rating =good inflow of foreign currency
 If less rating =outflow of foreign currency
Moody’s lowered its India growth
forecast by half a percentage point
from the 7.5% it estimated earlier.

28. OFFLOADS BY FII’s
 Heavy offloading in portfolios by foreign investors and global
traders also led to the sudden rupee weakness
 Foreign institutional investors, key to the fortunes of domestic
equity, poured $50 billion since last May 2015
 FIIs have aggressively sold shares in the cash market over the
last few sessions. They have also reduced their exposure in
Indian bonds, which has led to dollar outflows and pressured
the rupee.
 High volatility in INDIAN stock market and less stability .