Magazine article Economic Review

Rupee Continues to Fall

Magazine article Economic Review

Rupee Continues to Fall

Article excerpt

March witnessed sagging rupee visa-vis US dollar barring a pittance of gain on March 12 in the inter-bank market. The fall during the month was 53 paisa both for buying and selling or by 0.9 per cent, licking a new low of Rs.60.86 (buying) and Rs.60.90 (selling). In the kerb market, the fall was sharper at Rs. 1.18 both for buying and selling or by 1.9 per cent over the month, hitting a low of Rs.64.10 (buying) and Rs.64.15 (selling).

The gap between the inter-bank and kerb rates ergo rose from Rs.2.59 to Rs.3.24 or from 4.2 per cent to 5.3 per cent for buying and from Rs.2.60 to Rs.3.25 or from 4.3 per cent to 5.3 per cent for selling over the month.

The fall of rupee in inter-bank market since July 2000 and January 2001 has been 16.4 per cent and 4.7 per cent respectively. This is likely to aggregate 20 per cent by June triggering inflation.

Dealers point out that the rupee had failed to recover to lost ground versus the dollar on the back of official and corporate debt payments as well as increasing demand by multinational companies and foreign banks by the end of March. Experts say that speculative buying of the greenback is likely to drag the rupee's value in the nearfuture. Fundamentally, with foreign exchange reserves depleting, trade deficit widening and acute water shortage posing problems for agriculture sectorwhich is likely to show negative growth this year, the rupee will continue to remain under pressure. The economic growth has already been cut to 3.8 per cent and inflation is seen rising above 4.8 percent. There seems to be a little change for the rupee to stage any major recovery in coming months. On the international front, the dollar got firmed against most currencies such as Yen and Euro.

In January, the State Bank had asked exporters to bring in overdue export proceeds upto April 14. Bankers close to the State Bank say most exporters continue to misuse this facility and allow even current export proceeds to fall overdue hoping to gain as much exchange rate advantage as possible by April 14. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.