Indian Rupee at Historic low

rediff ^

[MightyTruth]

Rupee at historic low; why is it falling?

February 27, 2009

The Indian rupee on Friday depreciated to an all-time low of 50.69 against the US dollar in early trade on continued capital outflow by foreign funds and increased dollar demand from importers.

At the Interbank Foreign Exchange (Forex) market, the domestic currency was quoted at 50.69 against the dollar, down 23 paise from its previous day's close.

Dealers said concerns of capital outflows by funds and increased demand for dollar from importers caused the rupee to weaken. They added that the dollar's gains against other major currencies also weighed on the domestic currency.

Meanwhile, the outlook downgrade by rating agency Standard & Poor's too has increased the risk of further depreciation of the rupee in the near term. S&P cut its outlook on India's long-term sovereign credit rating to negative from stable on Tuesday, citing worsening government finances, which could raise firms' overseas borrowing costs and weaken the rupee.

Morgan Stanley has predicted that the rupee could test 52-53 levels in the next 4 to 6 months on balance of payments pressures.

[MyTwoCopperCoins]

Just using a by-pass to try if comments can be enabled on this thread.

If my trick worked, you will be able to see this comment.

[MyTwoCopperCoins]

Ping! It’s working now...

[MimirsWell]

This just might give the next government the impetus to cut down on public government spending, sell off the remaining public sector companies and start designing a lean government.

The Indian government doesn’t have the luxury that Obama does in its ability to print rupees - no one buys Indian bonds in the scale that they buy US/European ones.

The left should not be permitted to become king makers after the coming election.

[voletti]

The UPA govt is as misguidedly liberal as Obama is. And their spending has dwarfed all previous estimates.

I’m not at all surprised the rupee is falling given the rate at which they’re printing rupees.

Longterm, perhaps even medium term, India’ll likely recover and do quite well coz it has a lot going for it. These temp ups and downs happen and these are particularly difficult times for the world economy as a whole.