Did the Indian government deliberately allow the rupee to fall?
The Indian rupee has been holding 61-62 per dollar levels even as the US Federal Reserve minutes indicate that it will continue with its stimulus tapering program.
When the US Federal Reserve had announced plans to taper quantitative easing early last year, it had led to a sharp correction in emerging markets currencies, including that of India. As India had its own current account deficit problems, the rupee hit life-time low of 68.85 per dollar on August 28.
The Fed scaled back its $85-billion-a-month stimulus program by $10 billion in December and by a further $10 billion in January.
According to analysts, the Indian government has been instrumental in allowing the rupee to depreciate in order to boost exports and drive the sluggish economy plagued with high inflation and interest rates.
"The Jekyll (the good) is a terrific turnaround which the government has engineered in the context of a very bad inflation situation. It is a situation where you cannot expect the RBI to be very growth-oriented in the face of CPI running at 10 per cent. There are fiscal deficit issues. Hence 'spending your way out of a trouble' is not an option. Therefore, the decision to depreciate the currency and export the way out of trouble," said Shankar Sharma, Global Trading Strategist, First Global in a ..
Read more at:
Did the Indian government deliberately allow the rupee to fall? - The Economic Times
The Indian rupee has been holding 61-62 per dollar levels even as the US Federal Reserve minutes indicate that it will continue with its stimulus tapering program.
When the US Federal Reserve had announced plans to taper quantitative easing early last year, it had led to a sharp correction in emerging markets currencies, including that of India. As India had its own current account deficit problems, the rupee hit life-time low of 68.85 per dollar on August 28.
The Fed scaled back its $85-billion-a-month stimulus program by $10 billion in December and by a further $10 billion in January.
According to analysts, the Indian government has been instrumental in allowing the rupee to depreciate in order to boost exports and drive the sluggish economy plagued with high inflation and interest rates.
"The Jekyll (the good) is a terrific turnaround which the government has engineered in the context of a very bad inflation situation. It is a situation where you cannot expect the RBI to be very growth-oriented in the face of CPI running at 10 per cent. There are fiscal deficit issues. Hence 'spending your way out of a trouble' is not an option. Therefore, the decision to depreciate the currency and export the way out of trouble," said Shankar Sharma, Global Trading Strategist, First Global in a ..
Read more at:
Did the Indian government deliberately allow the rupee to fall? - The Economic Times
