Understanding the variation in Rupees exchange rate !!

There are many factors that determine the exchange rate for a currency for example political stability, security market performance, global market stability and many more.

As far as indian rupee is concerned, i believe there are two major factors that are currently deciding the fate of the rupee.

1) The political stability in India.
2) The EURO crisis.


To start with, lets see how political unstability is acting as a factor. Amidst all the corruption charges against the govt and the tiff amongst the alliance is causing the foriegn investor to have very low confidence in the Indian economy. This forces them to withdraw from security market, inceasing the demand for the dollars. We saw how rupee apriciated a bit as Mr. manmhan singh took chrge of finance ministry. Another factor being the EURO crisis, as the foreign investor loose confidence in EURO, they turn to dollars and hence cause the demand for dollar to rise in international market further strengthening the dollar.

Now the future of Indian rupee lies in the hand of our political stability and how the EURO nations deal with the crises.