Why Rupee's Fall Is Detrimental For The Economy? Is RBI Coming At Its Rescue?

Posted By:
Subscribe to GoodReturns
For Quick Alerts
ALLOW NOTIFICATIONS  
For Daily Alerts

    Rupee led by a host of macro-economic factors has seen no respite off late and in a historical eve today has hit the high of 69.09 in the early morning trade today. Nonetheless, the domestic unit has remained rather buoyed and at 1:30 pm was trading 68.93 to a dollar.

    Why Rupee's Fall Is Detrimental For The Economy? Is RBI Coming At Its Rescue?

    And as the free fall of the rupee fuels a number of concern such as the inflationary pressure, current account deficit, the RBI in a general circumstance intervenes either by way of enhanced borrowing etc. to tame the free-fall of rupee.

    Other pressures aggravating as a result of declining value of rupee is increased selling in the bond markets.

    This week after crude oil price hovered at reasonable levels for quite some time has again got a lift up as the US asked allied nations to stop purchasing Iranian supplies.

    Though some of the analysts view the Indian rupee to be not affected majorly from the global crisis, still it has emerged to be the weakest performing Asian currency so far this year with a decline of almost 8% since the start of 2018.

    Keeping in view, some of the banks have estimated still higher levels for the rupee against the dollar at 72 given the rising crude oil price which is seen as a continuos unfavorable point for the government finances.

    Steps taken by the RBI To regulate domestic currency

    Increased repo rate: To not mar the development of Indian economy, the RBI in its June 4-6 MPC meet has revised repo rates higher by 25 basis points to 6.25% for the first time in over 4 years.

    RBI sold dollars in futures market: While the demand for dollars has been ever-increasing, RBI has taken the futures market route as per a leading business daily report to tame the fall of Indian rupee against the dollar. The apex bank which otherwise resorts to open market operation in the spot market has taken the other route to not nullify the impact of OMO liquidity which relates to buying bond and infusing liquidity in the system.

    Goodreturns.in.

    Read more about: rupee dollar bond buying omo
    Company Search
    Enter the first few characters of the company's name or the NSE symbol or BSE code and click 'Go'

    Find IFSC

    Get Latest News alerts from Goodreturns

    We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Goodreturns sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Goodreturns website. However, you can change your cookie settings at any time. Learn more