FOCUS ON GROWTH TO DEAL WITH THE RUPEE DILEMMA

THE rupee poses a greater challenge for Reserve Bank of India than its perennial growth-versus-inflation dilemma. The rupee has fallen by around 3 percent in the past year.

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Donald Trump's victory in November only hastened the depreciation of the rupee as the dollar kept getting stronger in anticipation that the US economy would benefit from the policies of the new President. Yet, the rupee was better than most emerging market currencies thanks to RBI's interventions to protect the rupee. The Indian central bank sold dollars in the forex market to keep the rupee from hitting new lows, and in doing so, it depleted the country's foreign exchange reserve by $80 billion. India's forex reserves fell from $705 billion in September to $623 billion by January 17, an 11-month low.