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Last updated: 05 Jul, 2018  

Rupee.9.Thmb.jpg Rupee downslide

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Bikky Khosla | 03 Jul, 2018

The Indian Rupee slumped to an all-time low of 69.09 against the dollar last week, surpassing its previous record-low of 68.86 hit in November 2016, and though there was an immediate recovery from those lows on expectations of possible intervention by the Reserve Bank of India (RBI), the currency continued to struggle and on Monday ended at 68.80 a dollar--just shy of a six-year low of 68.825, touched on 28 August 2013--with chance of any major intervention by the central bank waning.

The concerns are obvious. The currency has now given back almost all the gains it made in 2017. Steep rise in the crude prices, trade war between the two largest economies in the world, hawkish policy of the US Fed and FPI outflows from India, US pressure on countries including India to stop oil imports from Iran -- all these factors contributed to this fall. The government blamed external factors for this volatility, with a Union Minister recently arguing that there was no need for a knee-jerk reaction. In contrast, some experts feel that the Rupee, if left unattended, may slide further to 70 soon.

Is this Rupee free-fall going to help our exporters? Usually, exporters rejoice when the Rupee falls as they earn in dollars; the more the depreciation, the more the earning in Rupees. But a long-term slide can easily take away this benefit, in the form of high costs of imported goods which go as inputs in manufactured goods for exports. Additionally, inflation, which has already showed an upward trend triggered by high crude prices, may deteriorate further, leading to high cost of inputs and transportation in the domestic market.

It is difficult to accept the argument that a 'wait and watch' policy is the best at this juncture. An industry body has recently viewed that RBI must step in now to safeguard macro-economic stability. It adds that the Commerce Ministry should dole out new measures to push exports, while taking measures to curtail non-essential imports. Also, commercial banks should devise schemes for the NRIs to push inward remittances, and SEBI should ease norms to attract investors to the secondary debt and equity markets. These suggestions sound more reasonable.

I invite your opinions.

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Rupee in slide
Deepak Taak | Mon Jul 9 04:34:36 2018
World is suddenly not as bloomy, as it was when Govt changed hands in 2014. Dollar poignantly poised & Crude oil favouring the new regime, suddenly with both shooting up, the regime seems to be completely lost. Blaming it all, on external agencies is always an easy way out for the rulers of this country, right from the times of Indira G. Let's see how it all pans out ??? Diplomacy until now was considered a plus, but how it matters when the fight is on for your own survival, first ???

S Kumar | Wed Jul 4 23:51:04 2018
Allowing the rupee to slide is stupid on the part of the Govt n RBI. People lose faith in their own currency and there is massive flight of capital from the country. Bureaucrats and Politicians like this as their money stashed abroad keeps appreciating in value. Depreciation does Not help export over a long period as India hardly has any exportable surplus. We are also giving away our assets n resources at lower prices to foreigners. Most stupid move!!!

Rupee downslide
s.chanda | Wed Jul 4 08:37:47 2018
The Govt. has already commented that the Rupee is overvalued and hence the fall to 70/- maybe earlier than anticipated

RBI intervention can be temperory remedy
shashank | Wed Jul 4 04:30:30 2018
Interventions may be just short term remedy. India need to curtail every non-essential import. Govt should give boost to non-conventional energy sector which presently is hurt badly. Dependence on oil must be reduced.

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