Indian Rupee takes a knock - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Indian Rupee takes a knock

May 10, 2000

The Indian Rupee slipped to an all time low of Rs 44.05 per US Dollar today. Among the reasons being cited are worries regarding a drought, increasing defence imports and a slowdown in foreign investment. The depreciation in the value of the Rupee has so far failed to elicit a response from the Reserve Bank of India. Read interview with Dr Y V Reddy, Dy. Governor, Reserve Bank of India

A lower value of the Indian Rupee should not disturb the government. Short-term debt is at negligible levels and the current account deficit is approximately at 1% of GDP. A lower value of the Rupee would only make Indian exports (of goods and services) more competitive. There would however be inflation in the cost of imports and debt servicing costs. This, given the large forex reserves, should not be difficult to take care of.

The industry (excluding exporters of course) may however be worried. Depreciation in the value of the Rupee implies higher cost of capital goods higher project costs. It also means higher debt servicing costs for companies that have not adequately hedged their exchange rate exposure.

The situation could turn grim if there was actually a pull out of funds from India. This is unlikely due to the fact that convertibility on the capital account is restricted. Therefore, more than anything else, the RBI's silence seems reflective of the fact that it concurs with the depreciation in the value of the Rupee. Probably, lower growth in exports is an area of concern.

Equitymaster requests your view! Post a comment on "Indian Rupee takes a knock". Click here!


More Views on News

These Stocks Have Rallied Over 300% In the Last 12 Months. Is the Rally Justified? (Views On News)

Nov 12, 2021

As many as 150 stocks from the BSE 500 index deliver multibagger returns in the past one year.

Ultimate Guide to Hedging Your Portfolio (Fast Profits Daily)

Sep 21, 2021

How can you protect your portfolio in a market crash? Find out in this video.

Ride the Indian Real Estate Revival with this 'Different' Smallcap Stock (Profit Hunter)

Mar 23, 2021

Affordability in the housing segment has never been so good in last one and a half decade. Here's how you could make the most of it...

My Latest Stock Recommendation (Fast Profits Daily)

Oct 9, 2020

How I picked an exciting stock using trends from both the commodity and equity markets.

Data is the New Oil but It's Also the New Sugar. Here's How to Fight it (Profit Hunter)

Jun 1, 2020

Is too much data hurting your quest for market beating returns?

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms