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The rupee depreciated by 40 paise to settle at 76.46 against the

US dollar on 24th of April 2021, tracking weak domestic equities and a strengthening greenback overseas. Forex traders said market sentiment weakened after a potential antiviral drug for coronavirus reportedly failed its first trial. The rupee opened lower at 76.30 at the interbank forex market and then fell further to 76.47 and finally closed at 76.46, down 40 paise over its last close. The rupee had settled at 76.06 against the US dollar this week .The dollar index, which gauges the greenback's strength against a basket of six currencies, advanced by 0.31 per cent to 100.74. Market participants are concerned that the sharp rise in coronavirus cases could weigh on the global as well as domestic economy."

Q.i What are the major determinants of Exchange rate as cited in the case. Explain. How has it affected the forex market?

Q.ii What steps does India need to take in order to stop the currency to further depreciate?