Rupee slid 10% in three days and has been shedding sheen in favour of Dollar in the past two months.Economists are baffled for an explanation when its slide is steeper than other asian currency during the period in companrison.
Is economics alone is the cause of a currency movement, the answer may not be emphatic anyway.
Complex global environment calls for singular unit of monetary measurement of value that is currency which calls for global governance.But it is not easy to come in years or decades or some centuries for ambitions of entities cross plays and scuttles efforts.
Any currency currently traded in global environment has the following underlying factors that determine its price at an instant:
1.Demand and supply of the currnecy.
2.Demand and supply of the currency required for the country under consideration to carry on global trade, currently let us say the dollar.
3.Foriegn Inward remittences.its vulnerability to repatriation.
4.Global demand, for the country under consideration,of its goods and services that is exports.
5.Reliance on the import bill.
6.Balance of payments overall and country to country(can we seal trade with a particular country over others).
7.Foriegn exchange reserve.
8.Swap capability of currency over the other, one commodity over the other , one country over the other.
9.Can the country impede the import bill by physical trade and consumption interference through policy-leverage.
10.Can the country step up exports.
11.Can the country improve upon trade deficit, budget deficit,Improve upon capital spending with local expertise and materials, avoid cost and time overruns.
12.Can we seal politics over currency Internally and externally.
13.Can monetary policy be quick and efficient and reaction through infusion