Improving Value of Indian Rupees through Study on Exchange Rate between INR and USD - Reasons, Strategies and Outcome

A weak currency is a signal to the weak economy. The depreciation in the value of rupee against the strongest currency of the world i.e. US dollar affects a lot of economic growth indicators such as reducing the inflow of foreign capital, risein the external debt pressure and also grows India’s oil and fertilizer bills. The most positiveimpact of depreciation of rupee is the stimulation of exports and discouraging imports andthus improving the current account deficit. For a country such as India, imports areunavoidable. In fact, our imports and exports of goods and services constitute around 40 per cent of GDP. Also, we have a Current Account Deficit (CAD) dependent upon capital inflows for financing. Hence, the Reserve Bank of India and the ruling government are initiating many progressive steps to improve capital inflow in the form of Foreign Direct Investment (FDI) and Foreign Institutional Investments (FII), reduce the inflation and deficit of the economy