Dollar v/s Rupee and commodities

The currency of any economy is based on dynamics of supply and demand, and its value depends on trading in currency exchanges all over the world.
Higher the demand for a currency on an exchange, the stronger it becomes and vice versa. .

NEWS: "The rupee fell sharply against the dollar at an all-time low of 50"
"Rupee ends weaker than 50 per dollar for first time"

So is the rupee falling with the dollar?
Forget about the rupee. Everything that is happening is to do with dollar.

Here is the comparison of INR and Euros against Dollars the past 6 months.

Don’t worry about the numbers in the ETF just look at the percentage drop. Both euro and INR moved steadily against the dollar.

Why?
People often forget that rupee’s appreciation in the first place has not much to do with the rupee in itself because dollar was moving down against every currency. Now, there is a flight to quality where people don’t want to have money in any unsafe currency and dollar is moving up against every currency.
So, draw rupee against Euros or pounds, you won’t notice either the climb or the drop the past couple of years.

So, how long dollar will be this way?
Nobody knows, but IMO at least for till this credit crisis comes to a reasonable end, dollar will be strong.

Dollar and commodities:
Historically, there has been a negative correlation between the dollar and commodity prices. The classic dollar-hedge is gold and crude.

The price of crude oil has two components
1) supply versus demand
2) value of the dollar.

Crude oil is mainly traded in US dollars.
When the US dollar weakens, the crude oil market participants like speculators, producers, refineries, and such others push the price of crude higher.
This would ensure that oil producers are not at a loss when they convert US dollars into their currency.

The price of gold is linked to the price of oil and to the movements of the dollar.
The gold price has been supported by the growing prosperity of the major Asian countries, particularly India and China. The Indians have a tradition of using gold jewellery as a store of family wealth, and the jewellery trade has been absorbing large quantities of current output.
Generally a stronger dollar reduces gold's appeal as an alternative investment, and makes the precious metal, and other dollar-priced commodities such as crude weaker.

Bottom line principal of "Demand / Supply " still applies to most of the recent phenomenon in Global market.