Current Affairs 4th February  2025
Current Affairs 4th February 2025 by Saurabh Pandey Sir
Factors Contributing to the Depreciation
of the Rupee
The depreciation of the Indian Rupee can be attributed to several interlinked factors: Impact of Oil Prices: The rising global oil prices have a direct impact on the Rupee’s value. As India is a significant importer of oil, any increase in oil prices leads to greater outflows of foreign currency, putting downward pressure on the Rupee. Effect of Equity Outflows: Recent trends indicate a surge in equity outflows from Indian markets, exacerbated by geopolitical tensions and global economic shifts. This outflow of capital results in decreased demand for the Rupee, contributing to its depreciation. Comparison with Other Currencies: While the Rupee is depreciating against the dollar, it is essential to compare its performance against other currencies. The overall strength of the dollar, driven by US Federal Reserve’s policies, plays a significant role in the Rupee’s valuation.
Analysts from various financial institutions warn of a potential long-term depreciation of the Rupee, particularly if oil prices remain elevated and global economic conditions worsen. Government’s Stance and Policy Measures. The Indian government and the Reserve Bank of India (RBI) have been vocal about their strategies to stabilize the Rupee: Officials emphasize the strength of India’s macroeconomic fundamentals, asserting that the Rupee’s depreciation is not a cause for alarm. The RBI has refrained from aggressive interventions in the forex market, allowing the Rupee to find its natural level. Conclusion The depreciation of the Rupee is a complex phenomenon influenced by a myriad of
