In the last month and a half, the rupee has tended to decline against the US dollar, with the pace accelerating in the latter part of November and December. It has been depreciating since the beginning of November 2014. As on Nov. 3, 2014 the rupee was at 61.38/USD and remained range bound till November 13 below Rs 61.5/USD after which it fell to Rs 62.21/USD on Nov. 28, 2014 depreciating by 0.6%.
Following this a reversal in trend was witnessed during the first week of December 2014. However, the rupee again lost the gaining ground and depreciated to Rs 62.09/USD on Dec. 10, 2014. It further touched it's lowest of Rs 63.17/USD on Dec. 15, 2014. Overall, the rupee has recorded 2.9% depreciation against the US currency as depicted.
In line with the falling rupee, the other major currencies across the world have also witnessed similar trend when compared on a point to point basis i.e. Dec. 15, 2014 over Nov. 3, 2014 against the dollar.
There are many factors driving down the rupee viz, deteriorating trade balance; moderation in foreign investment inflows; strengthening dollar; declining global crude oil prices; market sentiments/ expectations.
CARE Research expects domestic currency to hover between Rs 64-Rs 65 a dollar in the coming days until there is intervention from the RBI and the global situation returns to normalcy.
"There may also be measures imposed on gold imports in case the available trends suggest a continuation of the trend of increasing imports," it said.