When INR touched 55 versus 1 dollar it made the record, for some of the traders it was a key level. From the data on the RBI the dollar has appreciated by approximately 22 per cent in the last 1 year. This is a major move after the crisis of 1991.
Obviously the answer to above is difficult to analyze, because in the normal circumstances demand and supply decide the market determined rates. We do not have free market for the forex. The rupee has never been convertible on capital account. The Reserve Bank of India still has a variety of controls on who may buy foreign exchange and for what purpose in the market.
Above said and done than why are the analyst blaming everything from the risk aversion linking to the potential for a Greek exit from the euro zone,so does the Indian politicians.
Well something has to be called up a scapegoat so Greek is the target. I am very disappointed by the reason that Greek can influence INR to such an extent ?? Rather its the Govt of India lack of measures to improve the situation in the economy.
The root cause that I can see INR’s current travails is India’s too loose fiscal policy which has crowded out private sector investment, pushed up both inflation and widened the current account deficit, increasing the INR’s volatility and vulnerability. Reforms are in stalemate with the parliament.
For some of them who argue that a cheaper rupee creates jobs in India and income for Indians and an over-valued rupee destroys jobs & incomes in India & exports them abroad. They should not forget that the aviation sector is already under paralysis and the weaker rupee will be a disaster for it. Traveling abroad has already become dearer. Oil companies, which are worst hit because of the weakness in the domestic currency as they have to pay higher money for the same quantum of import.
I hope reforms has to be made sooner rather than later and govt should stop spending hell lot of money on the birth and death anniversaries.