Why is India's currency on the slide?

New low against the dollar today.

The Indian rupee crashed to a new low against the US dollar today as foreign investors continued to pull their money out of the country. Following a slump of 3 per cent today, the rupee has now depreciated by 24 per cent this year from 55 per dollar at the end of 2012 to 68 per dollar currently.

According to Timetric wealth analyst Shekhar Tripathi the depreciation is being caused by a number of factors. These include rising oil prices and a high current account deficit. He stated "the price of crude puts tremendous stress on the Indian Rupee as India has to import the bulk of its oil requirements in order to satisfy local demand."

A lack of government reform has also been highlighted as a contributing factor as the Indian government could have introduced far more reforms during the boom years between 2003 and 2008. Instead they failed to sufficiently build infrastructure or liberalize markets for labour, energy and land during this period and now it is far more difficult to source investment for this.

According to Progressive Media analyst Sunil Agarwal "the lack of economic reform and political paralysis was a major cause of the recent depreciation with the Reserve Bank of India sending out mixed signals on monetary policy".

He also pointed to the recent recovery in the US which has encouraged US investors to pull their money out of emerging markets and invest more money onshore.

India’s problems are not limited to the recent depreciation. Despite relatively strong growth over the past decade India remains one of the poorest countries in the world with the bulk of the population still living below the poverty line.

According to the latest Credit Suisse Wealth Book India’s wealth per capita amounted to US$2,560 per person at the end of 2012 which is well below the worldwide average of US$31,500. It also compares poorly to other major emerging markets such as China (US$15,000) and Brazil (US$16,500) and perhaps most alarming it is well below the fast growing Indonesia (US$7,100).

The Indian rupee crashed to a new low against the US dollar today. Photograph: Getty Images

Andrew Amoils is a writer for WealthInsight

Photo: Getty Images
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The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.