This time, the American dollar has gained the upper hand over the Indian rupee. The currency slumped to a record low of 70.82 per dollar. In general, this year has been a disappointing one for the rupee resulting in the losses of 11 percent against the dollar. Something similar happened in November 2016, but the fall was motivated by an objective reason - a monetary reform which removed the denomination of 500 and 1,000 rupee notes from circulation.
That measure in the government of Narendra Modi was regarded as a weapon in the fight against corruption, black market, counterfeiters, and of course, terrorism. The market instantly reacts on such serious movements. It took just a couple of days for the rupee’s exchange rate to collapse, facilitated also by long lines for cash machines and at bank branches. But even then, the losses were not so impressive. This time, the reasons for the collapse of the national currency were completely different. "Weakening has accompanied rising investment concerns about emerging markets more broadly, as well as a widening current account deficit, itself largely the result of higher oil prices," Tuan Huynh, chief investment officer of Deutsche Bank (Asia Pacific), clarified.
That is why, it is difficult to shape the future of the Indian currency, because if the monetary reform had specific deadlines, then investors' concerns may be indefinite.
