Psychological levels

A weaker rupee will help exporters

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The rupee on Wednesday breached the psychological level of 90 a dollar in trade and has fallen over 5 per cent since the beginning of the year. However, it is important that this depreciation is seen in the context of broader macroeconomic developments, and policymakers and other stakeholders do not get carried away by its specific levels. The data shows that the balance of payments in the second quarter this financial year turned negative to the tune of $10.9 billion, as against a surplus of $18.6 billion in the same period last year. The trade deficit has also widened, and economists are expecting the current account deficit to expand this financial year. It has also been reported that the Reserve Bank of India (RBI) is not aggressively intervening in the currency market, which is a sensible policy choice.