Posted by: Pradeep | May 18, 2008

Indian Rupee

Last two weeks Indian Rupee has been underperforming and as last year it was best performer, this year it is worst performer in Asian currencies.

What is bringing the great fall to Indian Rupee against US Dollar? The reasons that are being attributed are

  1. Import requirements due to rising oil prices – though oil has increased 33% in comparable period INR has depreciated by 8% only, in that if you remove last 2 weeks fall then it has not at all followed the oil rise pattern.
  2. Exporters probably going long on USD as they find any drop in INR good enough to make extra profits on their expected USD revenues or holding back USD from selling as most of the exporters are caught on wrong foot as nobody expected such a sharp fall in INR.
  3. RBI restrictions on inflow of USD which was imposed last time to rein in the inflation and unabated rise in Indian stocks.

This fall came as a bonus to Indian Gulfies (Indians in Gulf) as this would mean about 5-8% more value for their hard earned Dirhams.

It would also help India to earn more from exports or to become more export friendly.

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