Rupee depreciation is a major issue in the current scenario. After the global economic crisis in 2008-2009, the Dollar has recovered due to measures taken by the US government. Unemployment, lack of projects, inflation, bulk imports and poor exports etc have led to the fall of rupee tremendously. The faulty government policies, and the political and economic instability have led to a decline in the economy of India.

1. RUPEE
DEPRECIATION
Smriti Vashisth
Sneha Padgalwar

2. CURRENCY
★ Curraunt - in circulation
★ A generally accepted form of money
issued by a government and circulated
within an economy
★ It is the basis for trade

3. CONVERSION RATE
★ The price of foreign currency in terms of domestic currency
★ Classification :
○ Floating exchange rate - currency’s value is allowed to vary according to
foreign exchange market
○ Fixed exchange rate - government decides the worth of its currency in
terms of a fixed amount of another currency

4. CURRENCY STRENGTH
★ Expresses the value of currency
★ Classification :
○ Absolute Currency Strength
○ Relative Currency Strength
★ 1 USD = 59.90 INR (Apr 2, 2014)
61.24 INR (Mar 9, 2014)
62.31 INR (Feb 7, 2014)

5. Currency Strength over the
years 2004 - 2013
Currency Strength over the last year
2013

6. DEPRECIATION
★ Depreciation refers to the fall in value of a
currency caused by the demand for foreign
currency exceeding its supply in the market
AND
APPRECIATION
★ Appreciation is the opposite of
depreciation, i.e., the rise in the value of a
currency

7. DEPRECIATION OF RUPEE
★ Reduction in purchasing
power of Rupee in terms of
Dollars
★ Indian Currency has
depreciated close to 22% in
2013

8. REASONS FOR RUPEE DEPRECIATION
★ Demand Supply Rule
★ Fiscal Deficit
★ Oil Prices
★ Dollar Strengthening
★ Inflation
★ Volatility in the equity market

9. DEMAND SUPPLY RULE
★ Every country has an external account to keep track of the
cross-border transactions being carried out :
○ Current Account
○ Capital Account
★ In recent times, our current account deficit has widened and
capital flows are not being able to bridge the gap.

10. FISCAL DEFICIT
★ When a government’s total expenditures exceed the revenue
that it generates, it is called fiscal deficit.
★ High import of gold and crude oil burdened the deficit and
caused it to rise to 6.8%.
★ Fiscal deficit was measured at 4.8% of the GDP in 2012-
2013.

12. OIL PRICES
★ The domestic demand for oil
increases
★ The demand for dollar also increases
★ Cumulative effect - avalanche
breakdown
★ Faulty government policies on oil
and gas subsidies is responsible

15. DOLLAR STRENGTHENING
★ Due to recent measures taken by US government, the state of
dollar is improving.
★ Recession in the Euro-zone
★ US Fed has shown signs to end their stimulus
a plan devised by the central banks to counter a weak economy by jump starting it.
Actions such as lowering interest rates, increasing govt spending and quantitative
easing to put rise in the struggling economy.

16. INFLATION
★ Prolonged inflation leads to overall worsening of economic
prospects and capital outflows.
★ REER index reflects a country’s competitiveness in
international trade.
★ The REER index has fallen by 13.84% during the last year.
★ Rising costs of raw materials lead to the increased production
cost.

17. VOLATILITY IN THE EQUITY MARKET
★ Equity - investment made by FIIs in Indian companies
★ If the investors withdraw their money, it decreases the inflow of
dollars in the Indian market
★ Thus, by the demand and supply rule, the dollar becomes
stronger.
★ A temporary ban on import of gold coins caused withdrawal of
investments by FIIs.
★ Overseas investors pulled out Rs 44,162 crores from the Indian
capital market in June 2013.

19. CONTRACTION OF INDIAN ECONOMY
★ Increased unemployment
★ Despite the growth of IT outsourcers, the manufacturers have
suffered from under investing in ports, road, and other infrastructure
due to low-cost workers.
★ Poor growth of manufacturing, mining and agricultural sectors in
2013
★ During June 2013, the aggregate industrial production in India
reduced by 2.2%.
★ In July 2013, the RBI predicted a growth of 5.5%, which was less
than the earlier (5.7%).

20. QUANTITATIVE EASING
★ The cause for rupee depreciation nowadays.It was started in
2008 by USA

22. VARIATION IN RUPEE PRICE
(2008 - 2013)

23. IMPACTS

24. IMPORTERS EXPORTERS

26. IMPORTED GOLD
Cost of Imported Gold increases

28. FUEL PRICE
Burdens the Oil Marketing companies which then affect the
consumer due to rise in the price and causes inflation

30. STUDENTS STUDYING ABROAD
These students are severely affected

31. TOURISM
If Indian people want to go aboard it will become more
expensive for them as Rupee Depreciation occurs

32. OVERSEAS INDIANS
These people are benefited due to Rupee Depreciation as they
earn income in terms of dollar

33. COUNTRY’S ECONOMIC GROWTH

34. PEOPLE BENEFITED
★ Beneficial to Exporters
★ Good news for NRI
★ Benefits to IT sector
★ Benefits to Hotel Industry
★ Benefit to Investors invested in International Funds

35. PEOPLE IN LOSS
★ Negative impact on Indian Students and Travellers Aboard
★ Impact on Inflation and fiscal deficit
★ A blow to Indian Importers

36. STEPS BY RBI AND GOVERNMENT
★ Capital Outflow
★ Encouraging Capital Inflow
★ Limited Imports and Encouraging Exports

37. STEPS BY RBI AND GOVERNMENT
★ Oil Imports
★ Trade Deficit
★ International Cooperation

38. REMEDIES
★ Boost Exports and Develop import- substituting industries
★ Subsidies to the use of renewable resources
★ Increase import duty on Gold

39. REMEDIES
★ Create a stable environment to increase foreign investment
★ Quantitative Easing

40. Dollar in escalator
Rupee on ventilator
Nation in ICU
We are in Coma
Onion in showroom
Gold gone
GOD BLESS INDIA

41. QUESTIONS???