Experts are of the view that the rupee will depreciate to the level of 60 against a dollar. To curb the decline they have suggested that the government should take immediate steps towards economic reforms to woo foreign investors.
The declining rupee is adding to the woes of consumers who are already facing the heat of high inflation rate. The downfall in the Indian currency is also a big cause of concern for the importers who have to pay more for their purchasing and in return passing the burden on the consumers.
The Indian currency has depreciated more than 10 per cent since the start of April 2012. India's central bank the Reserve Bank of India, unlike the wide expectation did not change the existing key interest rates i.e. repo and reverse repo rates. It is said that this step has dampened the mood of investors that in turn has put more pressure on the Indian currency.
The most likely reasons that are being given for rupee depreciation are rising inflation, slowing economy, high current account deficit and high fiscal deficit.
According to media reports, RBI has written to oil marketing companies to buy 50 per cent of their dollar needs from public sector lender SBI in a bid to curb the currency's free fall against dollar.
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