Rupee’s Slide, RBI’s Inflation Targeting Mandate Results In Steepest Fall In Forex

Since the beginning of this year, the domestic currency has slided by some 14 odd percent and this has saw the RBI to step in several times and launch ways such as increase in import duty as well as easing of foreign borrowings, but with no respite.

And this time again RBI has intervened to stem continuous slide in rupee and scheduled a monetary policy meet. Soon after it, foreign exchange reserves saw the biggest decline in seven years time as the central bank against market expectations kept the key policy rate unchanged at 6.5% and said that action on rupee will be taken only after accounting for its impact on inflation.

For the week ended October 12, forex reserves slumped by over $5 billion to $394.46 billion, the steepest drag in reserves since November 2011.

On October 11, rupee hit its life-time low of 74.42 per US dollar but following week it gained on the back of losses in crude oil price. In Friday's session, rupee closed 73.3250, with a gain of 28 paise.

Currency analysts in the wake of rupee's continuous slide has further revised their downward forecast for the rupee lower, which is seen hitting 76 mark by the current year end.

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