Indian Rupee which depreciated about 17% during 2011 started the year 2012 with aggressive gain but could not able to maintain the momentum since 1st March 2012. Since the last one and half Month Rupee is under tremendous pressure and has breached the level of 52. This time it is not the international factor which is responsible for Rupee depreciation. All Indian Economic data released recently are not at all encouraging. GDP growth rate at 6.1%, Inflation at 7%, Industrial production growth at 4%, Current account Deficit, BOP situation all are enough to push rupee down. The current account deficit is likely to touch 4.3% of GDP in FY12 as against only 2.6% in FY11. Balance of Payment is likely to close in negative in FY12 first time since last three years .India need to work hard to reduce its CAD. Foreign inflow of capital has slowed down since the Budget announcement due to lack of clarity on Taxation laws in India and more particularly the implementation of GAAR. India need to work swiftly before it is too late to restore the confidence of Global investors. Last time RBI intervened and sold Dollar to the tune of USD 10 Billion to cool down the Rupee fall. It also announces so many restrictions to bring discipline in the Forex Market. RBI also announced so many policy decisions to bring NRI Money to India and relaxed ECB guidelines. But the impact was short lived. Now looking into the low level of FX reserve of the Country RBI will not be able to intervene in the Market so aggressively. I expect rupee will remain above 50 level for long time. Government positive policy decision can make a big change to Rupee movement.
No comments:
Post a Comment