Exchange rate of rupee/dollar have gone up quite sharply in the last week. Yesterday rupee had posted its biggest single day fall in last 3 year. There have been lot of concerns related US economy and it has impacted stocks markets in India and abroad. But the way it is currently impacting USD/INR exchanges rates is unprecedented. Everyone was expecting to have some volatility in the currency market, but the way rupee has fallen sharply, it is uncalled for.
There are many investors/traders who trade in USD/INR and these kind of sharp movements helps them a lot in trading currency. But there is one community is currently having ”’all the fun’ and they are NRIs. Dollars was getting them a exchange rate of 44-45 till last few weeks but currently it is over 48. So, as far as NRIs are concerned they will love it. But local economist won’t like it because it is going to have serious repercussion on the Indian economy.
USD/INR influence inflation and weak rupee will further worsen the situation. India is already going through high inflation and strong dollar will push it toward higher zone. Rupee has been one of the worst performers among asian currencies but drop of 2.5 per cent in one day is little bit of too much. Though analyst believe that this is happening primarily because of rising concerns related to local and global economical situation. And with the time, there would be more clarity on the issue, rupee may bounce back.
But as the current situation in USA and euro zone doesn’t seems to settle down in near term, rupee is expected to remain weaker in short run. Domestic factors are also having negative impact on the Indian economy and that will also contribute to weak rupee. As per RBI, Indian GDP is expected to grow at 8 per cent per annum.
As far as long term growth story is concerned, India remains fundamentally strong but in the short term but USD/INR exchange rate will remain high.
About akhilendra
Existence is a strange bargain. Life owes us little; we owe it everything. The only true happiness comes from squandering ourselves for a purpose….
Great spirits have always found violent opposition from mediocrities. The latter cannot understand it when a man does not thoughtlessly submit to hereditary prejudices but honestly and courageously uses his intelligence….