Article;
RBI Gold Curbs Seek to Keep Rupee in 52-56 Band
Comment;
If the RBI buys dollar it will depreciate the domestic currency and will not help the currency to trade within limit, 52-56. The Indian currency which is still near 56.50 will depreciate further and will worsen the CAD. We know that when we buy a currency its demand goes up and it becomes stronger and when we sell its supply increases and it depreciates. The current scene points that the Indian rupee is depreciating therefore it is worsening the CAD. We are paying more rupees for every dollar, we are sacrificing more rupees every dollar, our condition is getting worse, we are getting poor. If the RBI really wants to keep rupee trading 56 or less then it will have to sell dollars and not buying it.
Only a stronger rupee will attract foreign investments. If we are getting more inflows by spending on a stronger rupee we should spend. The current situation is that foreign exchange is flowing out of the economy due to a weak rupee...
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