Do we need to bail out the speculators

Do we need to bail out the speculators‏

RBI has embarked in a series of measures to suck out the liquidity in the market in order to defend the value of the rupee. The net effect is that it will bail out the speculators when it defends the value of the rupee. This is against the policy of letting the currency find its own level. Actually we really dont know how effective the effort is going to be. We need to wait and watch but in the guise of helping the importers the RBI will also bail out the speculators in the process. The best method is to let the rupee find its own level even if it means it will hurt the importers. It will also act as a negative for the exporters.

The reason RBI should not intervene is the culprit is CAD (mainly petrol products and Gold imports). And there needs to be a sea change in the policies of the government to change it. Some of the measures we need to do is to completely decontrol the price of Diesel as soon as possible which the government is reluctant to do.

The method RBI is using to take out the liquidity from the market is it is selling cash management bills in the market for 22000 crores.