Rupee could break out any moment

IN JANUARY, ABOUT a week before Donald Trump took charge as President, the rupee started tumbling dramatically, falling through 86 to the dollar. I had written a piece (tinyurl.com/4ckr27dp), where I said: "My guess is we will, but..."

- JAMAL MECKLAI

The last three months have seen a riot of volatility across the globe, and, as the chart shows, the rupee was no exception. Rupee volatility shook off years of torpor and shot straight upwards, crossing 4.5%, a level not seen in nearly two years. However — and while acknowledging that forecasting anything, let alone volatility, is a fool's errand — the chart does seem to suggest that this particular storm may be abating. The two dark lines appear to show that the rupee is trying to get into a range centred around (why not?) 85 to the dollar.

Of course, the rupee is, thank God, a protected currency — all those erudite market mavens (self included, till a few years ago) who were aggressively pushing for capital account convertibility should be grateful that stodgy old Reserve Bank of India knew better. Other currencies and, worse, financial assets like equities and bonds are still suffering serious tremors — the NASDAQ, while it has recovered from its correction (peak-to-trough decline of 25%), doesn't look out of the woods yet.