This may be the time to start thinking contrarian on the rupee. This is not to say that it won't hit 65 in the short run or even take a good look at 70 - god knows, taking inflation differentials into account, 70 isn't that much of a stretch - but the fact is 60 is a psychological turning point for the rupee.
From the looks of it, the Indian rupee does not appear to have found its bottom. Yesterday it had to be rescued from 61 to the US dollar with the Reserve Bank pitching in, but today it is under 60. In the days ahead this yo-yo movement on either side of 60 could well be the story.
However, this may be the time to start thinking contrarian on the rupee. This is not to say that it won't hit 65 in the short run or even take a good look at 70 - god knows, taking inflation differentials into account, 70 isn't that much of a stretch-but the fact is 60 is a psychological turning point for the rupee. Regardless of what US Fed Chairman Ben Bernanke does with his quantitative programme later this year.
Reason: 60 is probably the number at which every business starts looking different - especially those which have a dollar component in their costs or revenues. If the dollar is in costs - as in foreign debt or import components -businesses will import less; if it's in revenues, you will start seeing a revival in export earnings.
Even more, at 60 to the dollar India is a steal for foreigners.
At even 5 percent economic growth, foreign direct investment would find much better returns when the rupee is at 60. Projects with an internal rate of return (IRR) of, say, 20 percent at 50 would now see an IRR of 24 percent. Unilever's recent buyback offer became a steal at 60-with the company probably saving USD 400 million. It can now afford to have another go at buying out more investors with a higher price.
Non-resident Indians (NRIs) will find that Indian realty has gotten 15-20 percent cheaper. They can also now repatriate more to their relatives back home - and yet keep more dollars with them in their Gulf workplaces. NRIs will come home more often, and Indians will curtail travel abroad for tourism or pleasure.
Exporters - even if they are forced to cut prices - will find higher returns as they can now hedge less of their exposures and earn better returns. Software companies should be on cloud nine.
As energy becomes dearer, more people will converse fuel - creating a market for more fuel-efficient vehicles, etc.
Indian businesses whose products have a correlation to landed prices of imports - steel, for - will find their profits rising even when there are no imports.
More important, the hotter part of hot money that needed to flow out-of foreign investors in Indian debt - has flown out. It no longer makes sense to take your dollars out at this cost.
The point is the rupee has now reached a point from where the fundamentals of many economic decisions -for businesses, for individuals and for policy -makers. To be sure, these fundamentals were changing right through the time when the rupee went crashing through 53, then 55 and then 57 and then 60.
I believe that 60 is the number where there could be a clear psychological turning point for the rupee as it is 30-35 percent lower than where the currency was in 2010-11. Despite inflation, despite policy paralysis, despite economic mismanagement, the rupee may be about to find it feet.
If the rupee stabilises, the government will claim it was its efforts that did the trick. Don't believe it. The rupee does not dance to P Chidambaram's tunes. It is on its own trip based on more fundamental fundamentals and right now it could well believe that it has arrived.
It is the dollar that should be a sell for Indians from now on.
The writer is editor-in-chief, digital and publishing, Network18 Group