The USD-INR spot rate has just crossed a barrier – Rs. 56 to a dollar. This is the highest the dollar has been since July 2012 and just Rs. 1 short of the all time high.
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A rising dollar will stoke inflation. A move above 57 will cause further jitters for corporates that have foreign loans to repay and many of them have just renewed loans for a couple years. Worse, this means gold imports continue unabated even as the metal loses value internationally – since the falling dollar is likely to be the effect of a widening trade deficit.
