RBI may not let the rupee appreciate too much post election results

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 RBI may not let the rupee appreciate too much post election results
The Reserve Bank of India (RBI) is unlikely to allow the rupee to appreciate too much post election results.

The one reason for doing so would be the fact that this could hurt exports in the short to medium term.

Given that the current account deficit is under control and international prices of crude oil are very steady, it would not make sense to allow the rupee to appreciate. This is also because exports would be hurt, at a time when global economic recovery is still fragile and by no means robust.

Even if there is a steady government at the centre, it's possible that the RBI may not allow the rupee to appreciate beyond the 57-58 levels. It would continue to mop up dollars to prevent the rupee from appreciating and in turn boost its own forex reserves, which it already has been doing for the last several months.

This would make the country less vulnerable to sudden forex outflows in the case of an eventuality. Check currency rates here

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Read more about: rbi, forex
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