The Indian Rupee has depreciated significantly against the US Dollar and reached record lows last week. Why is this happening and imageswhat does this signify? This post talks about the dynamics of the rupee and reviews probable reasons for this depreciation.

Exchange rate for any currency pair is determined by the buying and selling pressure of the respective currency with respect to the other. If the market does not think positively about a currency then there is a downward pressure on that currency. The movement of rupee from 1991, when India changed from a fixed rate system to a managed floating rate system has been a roller coaster ride. Continue reading