The value of Indian Rupee is fast going down the drain in relation to the US Dollar. After reaching a high of Rs.39.40 against the US currency in the months of August and September 2008, the rupee nosedived and reached a low of Rs.50.41on November 20,2008 in the international forex market.
The market sources fear that it may go down further due to rampant fears ruling the FDIs in the backdrop of falling stock markets. FDIs have been fast withdrawing their funds from the Indian stock markets at a hefty pitch increasing the demand for dollar.
The collapse of some banking institutions in the US have forced the FDIs working in India to withdraw their funds to give a fresh lease of life to their mother institutions on their home soil. This action of the foreign investors is leaving the Indian stock market forces high and dry.
Adding fuel to fire, the Indian Government has decided to continue with the restrictions on the exports reducing the inflow of forex reserves into the country. At a time when the international economies are feeling the financial pressure at all levels, the forex outflow from India has increased multifold while the inflow of the forex reserves into the country has sharply declined leaving the Indian rupee in an unenviable spot.