Read the case study and answer the following.

The rupee rose by 3 paise to settle at 72.94 (provisional) against the US dollar on Monday, extending its gains for the fifth straight session despite heavy selling in domestic equity market. At the inter-bank Forex market, the rupee opened at 72.95 against the American currency and hit an intraday high of 72.89 and a low of 72.96 in day trade. It finally finished at 72.94, higher by 3 paise over its last close. On Friday, the rupee had settled at 72.97 against the American currency. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies advanced 0.10 percent to 90.32. The rupee has managed to hold its fort around the 72.90 to 73 levels, but given the sell-off in equities and the likelihood of a rebound in the dollar index, we see the trend tilting slightly towards depreciation going forward.

Depreciation of currency is caused due to

More supply and less demand of currency

The correct answer is option (2) : More supply and less demand of currency

Depreciation of a currency is typically caused by more supply and less demand for the currency. When the supply of a currency exceeds its demand, its value decreases relative to other currencies, leading to depreciation.