Wednesday, May 16, 2012

Who will bail out the rupee?

With assets across the world falling like nine pins, how can our very own rupee be far behind? It was no surprise then it has hit a new all time low of 54.32 per US dollar, crossing its previous low of 54.30 achieved in December last year. Thus, the big question is whether anything can be done to stem the slide. Nothing meaningful we believe as far as the short term is concerned. And even the central bank seems to have given up on this. But not before spending a whopping US$ 20 bn between September and now.

Finally though the reality that they are trying to treat the symptoms and not the disease seems to have dawned upon them. The onus of improving rupee's position lies with the Government we believe. Their policy making or the lack of it and reckless spending are the key reasons behind the rupee's current plight. And unless some strong action is seen on these fronts, the Indian currency may continue to hit new lows with constant regularity.

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