Indian Rupee at 78.29 has made an all time low against the US Dollar, but by and large it is a stable currency, which has been progressively depreciating to factor in the traditionally high inflation in the economy.
The recent Rupee depreciation is on account of FII portfolio outflows and a higher Current Account Deficit. CAD is defined as the shortfall between the money flowing in on exports, and the money flowing out on imports.
India’s CAD is expected to deteriorate in the FY 2022 to 3% of GDP on account of increased import bill for Gold, Petroleum and other commodities. However, with a healthy Forex Reserve position (USD 601 billion as of last week), RBI governor is reasonably confident of India sailing through this storm with relative calm.
IT services and other remittances remain relatively strong, which has greatly helped in reducing the CAD. India is one of the fastest growing economies and is likely to be one of the…