Article;
http://economictimes.indiatimes.com/news/economy/policy/did-rbi-goof-up-on-the-dollar/articleshow/10722223.cms
Comment;
It is true that the RBI's selling of dollar would have kept inflation low. The situation in which we are calls for a decision that whether we want to gain from rising rupee or from a falling rupee. If rupee goes up it will make imports less expensive or if it goes down it will make exports cheaper. India is a big importer therefore a stronger rupee will help in form of cheaper imports. But a weaker rupee would increase the demand of Indian exports and we have seen the exports rising. In the current times India is facing high inflation, above 10%. Therefore it is in the interest of India to opt for a stronger currency because if Indian currency falls it will increase demand for exports and employment and wages will increase in the export sector which is opposite of what the RBI is trying to do currently. But, if we were in normal times a falling rupee would be in our interest as it would increase income and employment with in our economy. More importantly fuel prices are also rising which are then translated in to higher prices of goods.
http://economictimes.indiatimes.com/news/economy/policy/did-rbi-goof-up-on-the-dollar/articleshow/10722223.cms
Comment;
It is true that the RBI's selling of dollar would have kept inflation low. The situation in which we are calls for a decision that whether we want to gain from rising rupee or from a falling rupee. If rupee goes up it will make imports less expensive or if it goes down it will make exports cheaper. India is a big importer therefore a stronger rupee will help in form of cheaper imports. But a weaker rupee would increase the demand of Indian exports and we have seen the exports rising. In the current times India is facing high inflation, above 10%. Therefore it is in the interest of India to opt for a stronger currency because if Indian currency falls it will increase demand for exports and employment and wages will increase in the export sector which is opposite of what the RBI is trying to do currently. But, if we were in normal times a falling rupee would be in our interest as it would increase income and employment with in our economy. More importantly fuel prices are also rising which are then translated in to higher prices of goods.
