Rupee crosses 52, Where do we go from here?

Rupee just crossed the 52 mark to the dollar.The rupee has been in a downward trend declining from 44 in a few months time to the 50 odd levels we saw a week back.

This fall to 52.45 from 50 odd levels happened at a very rapid pace in just a few days after statements coming from the FinMin and the RBI that showed their will to abandon the defense of the rupee which almost engineered the fall. Market expects the Rupee to touch 54 or even 56.

Subir Gokarn, a deputy governor at the RBI, said last week the RBI would be careful about using foreign exchange reserves aggressively to protect depreciation of the rupee.

The RBI Gov D Subba Rao blamed the fall on the ongoing EU crises. He was non commital on RBI policy.

Economic Affairs Secretary on Monday said the ability of Indian monetary authorities to intervene and stem the rupee’s slide was limited

The RBI has always maintained that it does not protect any particular level on the rupee and would only intervene to iron out excessive volatility.

Late reports on CNBC TV18 indicate that the govt has finally come out with a plan and a magic number 51 at which the rupee will be defended.

If this is true it will  once and for all end the debate on who dictates and determines RBI policy .

Never mind what the RBI officials say, the fact is that RBI has intervened on multiple occasions in the past especially to drive the Rupee down whenever there were heavy Fund inflows especially to protect exporters while it limited its intervention whenever there were massive outflows.

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One thought on “Rupee crosses 52, Where do we go from here?

  1. it is not due to failure of us and eu, it is also showing failure of indian economy. and when we need to tight our positions in the world market, we are loosing it. all due to our incapability to capitalize the weakning of us and eu economies.

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