The government has admitted that there is no chance of the rupee going back to 50-51 level against the dollar for sometime. Business Line reported today highly placed government sources have said, “We need to live with that (Rs 53-54 level) for some time.”
The news comes on a day
that rupee breached the Rs 56 mark again against the dollar. Business Line says that with the deteriorating eurozone crisis and change of power in France many investors would look at the safe haven of US government bonds. There are no problems, the government feels, with the fundamentals of the Indian economy.
PTI also reported that despite the fall in the rupee,the Reserve Bank of India has not been active in the currency market. PTI said, “Dealers said besides strong month-end demand from importers, particularly oil refiners, the euro’s weakness against the American currency on persistent euro-zone worries, kept pressure on the Indian currency.”
However, the government surely cannot be complacent about where the currency is headed. With foreign investors shying away from investing in India, the government has stepped up efforts to attract foreign retail investors into India’s equity and corporate bond markets by allowing Qualified Foreign Investors (QFIs) to keep money here as long as they intend to invest in capital markets.
Better managing of fiscal deficit and RBI’s intervention will surely be the focus for sometime to come to see where the exchange rate could consolidate. (curtsey : first post)
Rupesh Yatesh Dalal
Head Research Department
Head Research Department
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