Wednesday, August 8, 2007

Appreciating Rupee


Leave all the hifi statistics and business jargons the Rupee is Appreciating and that is the fact. Now the real quesiton is it really because of India' strong economic growth or just the dollar is week. There are variety of reasons and facts that support both theory. If the rupee is reallly rising why in the hell consumer inflation is high...? which implies rupee is loosing its value..? The obvious reason for the anomaly is India's inflation is not demand generated but supply generated,eroding rupee's real value. Appreciating currency against dollar is not India specific but its a global phenomenon.


Whatever be the reason, the appreciating rupee is not good in long run. It will erode export earnings and may washout the bottomline of Indias major exporters. Especially hit are the software and services sector. Luckily the central bank has taken some measures, like putting a cap on the External credit borrowings and other such measures. How far it will yield results is something we need to wait and see.

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