The Rupee is now 63.13 to a dollar, and at this point everyone has a good reason but no one really knows why. You’ll hear the standard stuff like oh, we have a current account deficit. Or that FIIs are exiting because the situation is bad. Or that the economy is slowing. Or the more interesting things like the government is letting the dollar slide so that politicians can bring back their black money stashed abroad for more rupees.
But you can’t get away from this, and this is happening right now.
(The last quote is from FX-Clear at CCIL. The RBI ref rate is lower, but the CCIL rate indicates the real market)
Impact: High inflation as our imports get expensive. Fuel prices will go up. Exporters should benefit. Companies that have borrowed from abroad are sinking their heads in the sand.
The Real Reason: I think it involves horrible policy making for the last five years. But I don’t really know.
