Aug 10, 1999|
Indian Rupee falls to 43.59; closes at Rs 43.40 per US$
The forex markets today witnessed a high level of volatility as the Indian Rupee depreciated to an all time low of Rs 43.59 per US$. However, the Indian Rupee closed stronger at Rs 43.40 on selling of US Dollars by public sector banks.
The depreciating rupee will no doubt come to the rescue of the burgeoning current account deficit. However, the fall in the value of the rupee could also have serious consequences for the economy.
The markets have attributed this surge in demand for US Dollars to petroleum companies, which have apparently been accumulating dollars to pay for crude imports.
The Reserve Bank of India has yet to make a formal announcement on the depreciation of the rupee. Moreover, it is not yet clear whether the central bank even tried to stem the depreciation of the rupee.
It is widely believed that the central bank is in favour of a gradual depreciation of the rupee, rather than a sharp fall in value. The Finance Ministry has itself taken into account a 5% depreciation in the value of the rupee for the fiscal year 2000. The Indian rupee has depreciated by 2.3% so far this year. Therefore, though the depreciation may be acceptable, the Reserve Bank may not approve of a sharp fall like yesterday.
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