This morning the Rupiah, Ringgit and Rupee(nearly hit 66
against the dollar) has hit historic lows. This means the tapering of support is coming soon
and we can hear from the Federal Reserve. Banks are the most hit among the
Stocks in Dalal street. India’s worsening macroeconomic scenario and the probability
of Nato’s expected action in Syria is hurting us.
Meanwhile a TV channel speculated that the Indian government
may reverse the capital control norms which was announced around two weeks back. For those new to this the
dollar remittance limit for individuals was reduced from $200000 to $75000. If
it is true then there will be a dollar outflow – rather panic outflow from
Individuals (this is my assumption). Only time will tell as to how RBI and the
Indian government handle this as it will accentuate the problem we have on
hand.
Concerns of the food security bill that has just been passed
also could cause a strain on the finances of the Indian government. As mentioned
in my earlier blog unless Mr.Manmohan bites the bullet and raises the price of
Diesel and Kerosene this problem will not go. If the Government does not raise
the price of diesel and kerosene it will continue to rob peter and pay Paul.
As suspected the RBI would have intervened when (the rupee)
was near 66 against the dollar. But coming again to my earlier blog – Why should
RBI bail out speculators? The value of the rupee could also have been under
pressure because of the need for dollars as it is month end ( from Oil
Marketing Companies in India)
Meanwhile the Government is on a overdrive to clear big
ticket projects that will bring in Dollars. What is surprising is the
Government has slept for 4 years and a pressure on the rupee has made it wake
up from the slumber. Maybe better late than never.
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