Why Indian currency is depreciating

If the demand for the dollar in India is more than its supply, the dollar appreciates and the rupee depreciates. Demand for dollars may be created by importers requiring more dollars to pay for their imports or by Foreign Institutional Investors (FII’s) withdrawing their investments and taking the dollars outside India, thus creating a shortage of dollar supply, which, in turn, can also increase the demand for the dollar.

Similarly, when the supply of dollars in India increases with respect to its demand, the value of the dollar decreases in terms of rupees. Supply can be created by exporters bringing in more dollars from their revenues or FIIs bringing more dollars in India to spur their investments.

Consequencies: 

                          Refer the below link: (Hope this may useful to you)

https://zeenews.india.com/business/news/finance/rupee-depreciation-how-will-it-affect-you_77821.html

Refer the below link:

https://simarpreetgulati.blogspot.sg/2013/07/4-reasons-for-depreciation-of-indian.html

Numbers are important but so are sentiments. Confidence level in the investors has weakened, and India, being a sound investment destination, is no longer sound anymore, because of ineffective policies of the government. 

Inflation, rupee fall, food security bill, border tensions, local body tax, and of course massive corruption, will hit the country hard. 

yes mahir, simarpreet, nagasai...  it is required for knowledge purpose.

of course, for SFM also, it is helpful

There are many factors leading to movement in rates and leading rupee to depreciate . Interest Rate , Inflation ,Speculation , Fiscal deficit , Demand & supply ,political stability etc  I guess it is not because any one of  factors its combination of all these  factors .

The value to dollar is given by petrol only.This is called Derivative Trading. America has stopped valuing its Dollar with Gold 70 years ago.
Americans understood that Petrol is equally valuable as Gold so they made Agreement with all the Middle East countries to sell petrol in Dollars only. That is why Americans print their Dollar as legal tender for debts. This mean if you don't like their American Dollar and go to their Governor and ask for repayment in form of Gold,as in India they won't give you Gold.

You observe Indian Rupee, " I promise to pay the bearer..." is clearly printed along with the signature of Reserve Bank Governor. This mean, if you don't like Indian Rupee and ask for repayment,Reserve Bank of India will pay you back an equal value of gold..

At present the problem of India is the result of buying those American Dollars. American white papers are equal to Indian Gold. So if we reduce the consumption of petrol and cars, Dollar will come down

Bretton Woods system of Gold standards came to an end in 1971, and was replaced by fiat currency. Amercians have always functioned very secretively and their media is not as strong and independent as ours, so others won't even know what they are doing. There were rumors that fort knox gold was sold off to recover from the 2007 credit crisis, and now the americans are trying to prove that they are even now the most powerful economy in the world, which is why India is no longer the favourites amongsts the investors. On the other hand, due to growing weakness in the economic policies of our country and growing inability to perform and deliver, India's internal and inherent weakness is clearly visible which suggests that India's progress depends only on foriegn investments like FDI, FII etc and not on its own human resources. The coming few years will show us the mirror that India's growth so far was only because of the perception of foreign countries of India and nothing else. How long are we going to run away from the facts about our countries weaknesses? Congress is likely to come back after they pass the food security bill, and food security bill will only add more problems. The question is how will the congress deal with the dire economic crisis in 2014-15 which we all are forseeing.

Now that the FIIs are booking profits and a QE tapering is expected in September, chances are that the Rupee will plunge more. 

Some experts say that Rupee may touch an all time low of 70 to a Dollar.

Rupee Depreciation:

 The government policy is responsible to quite a extent:

1. India has such a huge surplus of coal blocks but still it has to import meaning outgo of forex reserve, the coal gate scam is responsible for it.

2. People have lost faith in the government policy our finance minister has made a policy of reducing the current account defeicit but the market has shown its response by crashing 756 points in a day.

3. The RBI and the government has come face to face regarding various foreign exchange policy.

4. obviously the Demand and supply plays a inherent role in determining the $ price.

In physics entropy always increses so the chaos in econoics, unless some measures taken externally from the system. Not necessary congress has has to come back again. What are the other options, well not sure, possibly a more chaotic assembly  reprsented by all state level parties  & no national level parties having any majority. More chaotic situation resolves the less chaotic issues.In coming election we indian have to think wise in selecting our representitative from all the local assemblies.

Dont be predetermined whom to vote.

Dont judge the party by the candidate and vice versa.

Dont consider the election manifest, our consciousness will have our own manifest.

Dont  have any undue influence on your consciousness.

Use both mind & soul in your judgement.

Dont be mislead neither by extremists nor perfectionists.

When there is a question of trade off or balancing issues always choose the middle way

Discuss issues, take opinions but never disclose your decision, its unique as every vote counts.

Hopefully we shall overcome.