Reasons why the ruppee is falling against the dollar

  1. India’s external deficit is 5% of the GDP in 2012-13 compared to 2.8% in 2008-09
  2. A large current-account deficit is a classic symptom of a pre-crisis economy living beyond its means – in effect, investing more than it is saving.
  3. This is where QE comes into play. It provides the means in terms of foreign investments to live a lavish life and to keep spending more. 
  4. The emerging markets including India have high interest rates, there by attracting foreign investors.

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