The Great Fall

The U.S. dollar has not only fallen against the Indian Rupee but against many major foreign currencies like Euro, Yen and Canadian Dollar. Infact the Canadian Dollar has moved up so swiftly in the past 3 months that it is now close to being equivalent to the U.S. Dollar. Till December 1 Canadian Dollar fetched 0.866998 U.S Dollar, now it is close to 0.94, soon it is forecasted to cross the value of U.S. Dollar. And by soon, I mean before the end of this year. If this were to happen it would be a first of sorts.

Now, lets look at why U.S Dollar will fall further.
U.S. GDP growth was dismal 0.6% (annualized) for the first quarter of 2007. Part of it was due to inventory drawdown, hwich is expected to correct itself in the next quarter. However there is a slump in the U.S. housing market. It is believed that after the results of this quarter the "Fed" will lower interest rates. If this does happen(which is likely), this will cause further devaluation.
From India's perspective, if inflation goes up again, like it had in the last quarter, we will have to hike up interest rates to control it. This will further appreciate the value of the Indian rupee v/s the U.S. Dollar.

Now what does this mean for us in Canada? Well, exporters closing shop. Canadian tourists can enjoy cheaper holidays in U.S. and yes a stronger Canadian Dollar might create more self confident Canadians visa vis the Americans.