THE Indian currency, unmindful of its committment to the economy, is touching new lows each day. Last week, it tore into 79 against the US dollar and now seems steadfast on cracking 80.
The RBI, which has all the powers to lord over the exchange rate, is intervening prudently and is instead letting the rupee find a level of its liking. Perhaps, for now.
The one thing that's weakening INR is higher demand for dollars. High imports led by soaring crude oil prices and sharp capital outflows (India being one of the worst among emerging Asian peers) are together raising the demand for dollars, depreciating rupee.
Since January, the domestic unit is down 5.6% against the greenback over last year, prompting the central bank to spare $41 billion out of its over $600-billion-odd forex reserves war chest it built in the past two years. But that move has sliced India's import cover to single digits for the first time in three years. According to Barclays, RBI, under Governor Shaktikanta Das has a strong preference for currency stability and the ferocity of pressure on the currency can be seen from the fast depletion of forex reserves.
This story is from the July 04, 2022 edition of The New Indian Express.
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This story is from the July 04, 2022 edition of The New Indian Express.
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