Abstract of the paper entitled:The recent rupee dollar slide August 2018.
Right from September 1949 devaluation of rupee(which was a follow
up to British devaluation of pound sterling),through June ,6,1966 and july 1991
two stage devaluation of rupee(both necessitated by major economic crisis, the
rupee has undergone a secular depreciation in line with economic fundamentals,
with occasional bout of currency
appreciation(under the impact of capital flows) which RBI used to resist for the fear of losing competitiveness of export sector. For
more than three years the rupee has been shuttling between66 and 69 per USD and
in mid august 2018 it crashed to historic low of 70 plus close on the heels of
massive depreciation of Turkish lira. However
for the fall and fall of rupee besides
hardening of the USD and firming up of oil price, widening of current
account deficit, difficult to finance (as
outflow is more than the inflow) is mostly responsible. It is felt by
experts the range 70-72 is the right
level .The current rupee problem is a
classic combination 50: 50 interplay between domestic and external factors –a kind of cocktail .It is time the
government realized ,the dependence on
foreign capital for financing CAD , perpetually, is fraught with dangerous
consequence especially when the dollar is strong and panic pervades the world financial markets..
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