Key reasons why Re is sinking each passing day

WIDENING CURRENT ACCOUNT DEFICIT: This is resulting in creating more actual as well as speculative demand for the dollar and other convertible currencies.

POLICY INACTION: Perception of lack of clarity on policy front is also fanning speculative demand wherein the RBI on one day said it will tighten liquidity and on yet another said it will inject $1 billion in the market.

LOW FOREX RESERVES: India's foreign exchange reserves are enough to cover imports of seven month only. Due to low reserves, the RBI can't intervene aggressively.

GROWTH SLOWDOWN: GDP growth fell to a decade low of 5 percent in 2012-13. The situation is unlikely to improve much this year. Foreign investors are pulling money out of the Indian markets due to slow growth.

DEPENDENCE ON FOREIGN MONEY: CAD was financed by foreign money for many years. Withdrawal of money by overseas investors is leading to weakness in the rupee.

STIMULUS WITHDRAWAL: Indications that the US may withdraw or ease the fiscal stimulus package could put the brakes on funds for developing economies.

CAPITAL CONTROLS: The decision by RBI and the centre to impose temporary restrictions on capital flows has not gone down well with the markets, as it will not only discourage Indian companies from investing abroad, but also foreign firms from pumping money into India.

SPECULATIVE TRADING: Speculative trading in currency markets is putting further pressure on the Indian rupee.