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What factor primarily contributes to the depreciation of the Indian rupee against the US dollar?
  • a)
    Decrease in oil imports
  • b)
    Increase in demand for Indian goods
  • c)
    Higher inflation rates in India compared to the US
  • d)
    Strengthening of the Indian economy
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
What factor primarily contributes to the depreciation of the Indian ru...
The depreciation of the Indian rupee is largely attributed to higher inflation rates in India compared to those in the US. When inflation rises in a country, the purchasing power of its currency declines, making it less attractive to investors. This can lead to a decrease in demand for that currency, while higher demand for foreign currencies, such as the US dollar, can weaken the local currency. Interestingly, inflation not only impacts currency value but can also affect interest rates and economic stability.
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What factor primarily contributes to the depreciation of the Indian rupee against the US dollar?a) Decrease in oil importsb) Increase in demand for Indian goodsc) Higher inflation rates in India compared to the USd) Strengthening of the Indian economyCorrect answer is option 'C'. Can you explain this answer?
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