The dollar is at Rs. 61.1 61.7 and things look bleak again. Despite the cut in liquidity by the RBI, the dollar is hitting a new high against the rupee – and this is not a “failure” of the RBI measures, it is that such measures necessarily take a lot of time to act.
Updated: The dollar has gone to 61.7 now.
(Note: the last data point – for August 6 – is based on the current spot price reported at CCIL. The rest are RBI reference rates)
The Euro has been spiking even earlier (Data till yesterday only, RBI)
Source: RBI
Where does this go from here? The dollar should rise further in the near term.
Foreign fund flows stabilize the rupee, which, ordinarily, should depreciate a massive amount every year due to our import-export gap. Unless we fix that gap, we have to depend on foreign flows. For that, there will be a point where our exports are competitive, and even building that export capacity can take months or years.
The impact of a rising rupee is hugely on industry and jobs. Expect a recession before the rupee shows serious strength. And a recession in the real estate “cannot-go-down” industry as well.
