ONE WAY STREET
THERE IS NO RELIEF for a depreciating rupee against the US dollar. This week, the Reserve Bank of India’s refusal to use its interest rate tool for protecting the currency seems to have ended up creating more trouble for the rupee. The rupee is inching towards 75 to a dollar. The RBI intervention has also slowed down as seen from the steady level of forex reserves, that declined by $25-30 billion. The IL&FS debacle and tremors in the NBFC sector have also further pushed down the stock market, creating a panic like situation for foreign investors to exit India. The way bad news is piling up globally, from high crude oil prices to trade wars, the outlook for the rupee looks negative. There are some hints that the RBI will come out with administrative measures to restrict dollar outflow but until then it is a one-way street.