Mecklai graph of the day: Depleting reserves, dooming Rupee
Mecklai graph of the day: The Foreign-exchange reserves in India have declined to USD 291 billion from USD 293 billion in a period of 5 months.
Mecklai graph of the day: Depleting reserves, dooming Rupee
It can be seen from the below graph that the Foreign-exchange reserves in India have declined to USD 291 billion from USD 293 billion in a period of 5 months. This is largely due to the efforts of RBI to contain the Rupee slide. However the Rupee has continued to fall from 52 levels to 56 levels in 5 months from January to early May.The intervention by the RBI in the foreign-exchange market to limit volatility has not proven enough to stabilize the Rupee, as the domestic currency continues to be weighted down by strong dollar demand from importers and oil companies and also due to escalating global uncertainties. This suggests that RBI cannot intervene endlessly as intervention also involves cost and saving the domestic unit is not the only priority of RBI hence expecting the RBI to intervene in strong manner to save the sagging rupee would be a false hope.The below graph shows the relation of the rupee to the forex reserves in India
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