There was no relief from freefall, as investors’ sentiment lay completely torn. The rupee closed on Monday registering a new low of 63.13/$,...
There was no relief from freefall, as investors’ sentiment lay completely torn. The rupee closed on Monday registering a new low of 63.13/$, down over 14 per cent against the dollar this year, thus marking a decadal fall on a single day. Although a series of measures was taken by the government and other regulators, the rupee hit new lows in the past two weeks. In fact, the pressure on the rupee increased over last two years as the confidence of the foreign investor was beaten against the Indian currency due to slowing of economy and increasing current account deficit.
Even the weakness in the rupee is evidently being seen since the opening of the trade on Monday; Government agencies failed to take any major step to contain the rupee fall. Moreover, the Finance Secretary was vocal that ‘the government, for now, is not considering taking any further steps for tackling the rupee’s fall.’ Perhaps, it is a sensible decision, as globally most of the currencies of emerging markets have fallen expecting that the United States may soon roll back the stimulus measures which are responsible for channeling the big-ticket investments outside the America with a view to gaining higher yields.
Of course, there are some home-made failures on the part of the government – slow pace of economic reforms, host of corruption charges against people who matter in the government, an opinion formed by foreign investors about policy paralysis, and a record Current Account Deficit (CAD) have added up for the present currency crisis. And then there were some ill-timed policies like monetary action which has lowered the financing window and increased the interest rates. Now, the markets are looking at the banking regulator for more such action, which is not forthcoming, allowing the rupee to fall freely.