Why is the Indian currency falling?

Indian rupee falls to historic low

On Tuesday, the Indian currency slid to a new low: one US dollar briefly cost 61.60 rupees. Since the beginning of May, the Indian currency has lost more than ten percent of its value. The rupee also tends to be weak against the euro, with a euro costing 81.54 rupees at times on Tuesday.

One reason for the lows are hints by the US Federal Reserve to curb the purchase of securities. Many investors are now withdrawing massive amounts of capital from emerging markets. In addition, India is troubled by the large current account deficit and delayed reforms. In mid-July, the country's central bank tried to stop the currency collapse by restricting the flow of money. The government is striving to stimulate the economy through new spending programs. In the past financial year (March 31), the economy of the up-and-coming emerging market grew by 5.0 percent, as weak as it was a decade ago.

/ fdo / DP / jsl

NEW DELHI (dpa-AFX)

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