THE SLUMP OF RUPEE
Indian rupee has continued to slump against the dollars. According to International Monetary Fund (IMF), in the near future, the rupee may fall beyond the 94 rupees. India’s forex reserves have also dropped below $600 billion, reduced by more than $50 billion since September 2021, when forex reserves stood at an all-time high of $642 billion. This drop in forex reserves is said to be taken place due to the interventions made by the Reserve Bank of India, to bring the rupee to its natural value. However according to RBI officials, the drop in forex reserves is due to a fall in the dollar value of assets held as reserves by the RBI. To avoid the market rate volatility , RBI looks to reach to a natural value of rupees. RBI issued directives to the state run bank to sell dollars in the open market in the exchange of rupees, so as to increase the demand of rupees. The value of the currency is determined by its demand & supply. When the supply of the currenc...