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There are several factors. But the recent bout of weakness is fueled by the prospect of the unwinding of the bond purchase program of the US Federal Reserve. The US Fed had been printing money to bolster its economy. Now that there are signs of some strength in the US economy, it may start winding down the program of adding more money into the system. A possible winding down of the asset purchase program of the US Fed and improvement in the health of the US economy will strengthen the US dollar. Investors will withdraw investments from emerging markets such as India in the short term and chase assets in the US, since assets in a strengthening US economy are seen as attractive. The outflow of money from emerging markets may lead to currency weakness. Concerns over the pace of economic reforms, the health of the domestic economy and a yawning trade deficit are also impacting the rupee. *How will weaker rupee hurt the economy? A weak currency will make imports more expensive. Normally, theory suggests this should lead to a curtailing of imports. However, given the fact that some of Indias major import items, like crude oil, are immune to price changes, the theory does not quite apply in this case. *What is current account deficit (CAD)? The CAD is effectively a measure of the amount of net capital inflows from abroad that an economy depends on, whether in the form of borrowings or investment.