Mecklai graph of the day: India's forex reserves vs Rupee
Mecklai Graph: The current financial year 2012 started with shock of India‘s sluggish growth figure of 5.3%, lowest since last 9 years, marred by unrelenting/sticky inflation, record current account deficit due to increased demand by oil importers, outflow of money by the FIIs and global slowdown.
October 17, 2012 / 18:44 IST
Mecklai graph of the day: India's forex reserves vs Rupee
The current financial year 2012 started with shock of India’s sluggish growth figure of 5.3%, lowest since last 9 years, marred by unrelenting/sticky inflation, record current account deficit due to increased demand by oil importers, outflow of money by the FIIs and global slowdown. Rupee started taking a hit from the persisting negative sentiments as government did little to support it by taking the necessary policy steps. In the mean time, RBI sold dollars amongst other measures that it could employ to curb the slide in the rupee. India’s foreign exchange reserves plunged by $2.40 billion to $285.85 billion in early June. By mid June, the rupee depreciated to an all time low of 57.34 against the dollar.After government got an ultimatum from Standard & Poor’s and other rating agencies of India’s credit downgrade to junk status, it announced the much awaited economic reforms and some hard measures like hike in diesel prices, subsidy reduction, FDI in insurance and pension etc. The comeback of rupee to the immediate high of 51.38 per dollar has allowed RBI to replenish the forex reserves to current levels of $295.04 and the same are expected to rise further.Below graph shows the change in India’s forex reserves with change in the rupee
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