Tag Archives: A weaker rupee could also make difficult the RBI’s job of keeping inflation in check

A weaker rupee could also make difficult the RBI’s job of keeping inflation in check

The Indian rupee has crashed past the 72 mark against US dollar and continues to be on a roller coaster ride. The sudden fall has caught the government and the central bank off guard. High volatility in global crude oil prices and a ballooning current account deficit have been blamed for the rupee’s free fall. Does rupee at 72 rings alarm bells to the Indian economy or is there an opportunity in the currency crisis as the Narendra Modi government claims? Beginning today, Firstpost will publish a series of articles where experts will examine the economic impact of the rupee fall.

“Look at China,” they say, pointing to its highways and the infrastructure at Shanghai.

“Look at China,” they say, pointing to its sustained high growth for decades and its huge pile of foreign exchange reserves built by manufacturing exports.

“Look at China,” they say, pointing to its emerging geopolitical influence in the Indian Ocean region and Africa.

Strangely, few in India seem to mention that Beijing’s economic might was built with a shrewd foreign exchange policy that kept its currency, the renminbi, artificially low for a long period to help its export competitiveness. The Chinese currency is still subject to state controls.