In­dia's rupee likely to re­main weak de­spite bet­ter eco­nomic in­di­ca­tors

The Pak Banker - - COMPANIES/BOSS -

The In­dian cur­rency breached the re­cent level of 64.30 and the rupee cur­rently has de­pre­ci­ated be­low the psy­cho­log­i­cal 65 a dol­lar mark and hit the low at 65.32 on last Fri­day. The Hindu The In­dian cur­rency breached the re­cent level of 64.30 and the rupee cur­rently has de­pre­ci­ated be­low the psy­cho­log­i­cal 65 a dol­lar mark and hit the low at 65.32 on last Fri­day. Lot of fac­tors have con­trib­uted to the re­cent fall of the rupee against the dol­lar. The ma­jor rea­son has been the con­cerns about an im­mi­nent in­ter­est rate hike by the U.S. Fed af­ter al­most a decade which led the dol­lar in­dex mount­ing to a high.

While talk­ing to ex­porters in Septem­ber 2013, P. Chi­dambaram, the then Fi­nance Min­ster, had re­torted that the right level of rupee would be be­tween 59 and 60 a dol­lar and the "cur­rency should not over­shoot that level." He made this state­ment ex­actly one month af­ter the fall of rupee to its his­tor­i­cal low of 68.93 on Au­gust 28, 2013. Since then, the rupee re­mained strong , for var­i­ous rea­sons.

With the un­prece­dented fall of rupee in 2013, the In­dian cur­rency turned out to be the worst per­form­ing cur­rency amongst the other emerg­ing mar­ket cur­ren­cies on the back of pol­icy log­jam, sub-par growth regime, high in­fla­tion­ary pres­sures, soar­ing cur­rent ac­count deficit (CAD) and the talk of ta­per­ing of bond buy­ing pro­gramme of the U.S. Fed­eral Re­serve (U.S. Fed).

How­ever, there was a sig­nif­i­cant re­cov­ery in the do­mes­tic unit af­ter the ap­point­ment of the new Re­serve Bank of In­dia (RBI) Gover­nor Raghu­ram Ra­jan, as he in­tro­duced a slew of mea­sures to con­trol volatil­ity in the In­dian rupee, which cur­tailed fur­ther fall. The rupee also got a boost af­ter the for­ma­tion of a BJP-led Gov­ern­ment at the cen­tre, which re­sulted in sig­nif­i­cant cap­i­tal in­flows to the eq­uity as well as debt mar­kets. This was a time when the rupee trans­formed it­self from be­ing one of the worst to one of the best per­form­ing cur­ren­cies within a span of just 8 to 9 months com­pared to other emerg­ing mar­ket cur­ren­cies. The rupee held its ground there­after.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.