RBI clearly failed to attain stability in Indian Rupee
One of the main functions of any Central bank is to maintain currency stability so that the businesses and corporates can safely plan their operations, borrow and deal with clients and suppliers abroad confidently. Whilst RBI is supposed to be a guardian of foreign currency exchange rate, they have failed abjectly. Once $: INR was stable around Rs45/- now it has touched Rs 64/- and it may fall further resulting in higher cost of fuel, which drives the economy.
Many of the events what are being unravelled now has been discussed in this blog earlier. Please click the links for details
http://www.financialstrategyonline.com/2011/12/rbis-smart-moves-taking-india-down.html
http://www.financialstrategyonline.com/2012/06/indian-economy-under-attack-sleepy.html
http://www.financialstrategyonline.com/2012/04/daughter-in-law-trying-to-imitate.html
On another blog post dated 21 Oct 2011 Financial Thoughts had screamed as follows:
“Those who support further indiscriminate rate hikes must go back to US in 2006 when US Fed was blindly hiking the rates in pursuit of a mirage, which achieved nothing but a fantastic economic collapse in 2008”
Now let us wait for the new RBI Governor who will take charge next month.
The Govt. should not have extended the term of Subbarao as RBI Governer during Sept. 2013. Then the current currency crisis could have been avoided - whilst some depreciation in Indian Rupee would have been unavoidable due to the recovery in the USA, the sharp fall from Rs 45 to Rs 64 levels could have avoided by ensuring economic growth of 6.5% (i.e. by maintaining lower interest rates).
One of the main functions of any Central bank is to maintain currency stability so that the businesses and corporates can safely plan their operations, borrow and deal with clients and suppliers abroad confidently. Whilst RBI is supposed to be a guardian of foreign currency exchange rate, they have failed abjectly. Once $: INR was stable around Rs45/- now it has touched Rs 64/- and it may fall further resulting in higher cost of fuel, which drives the economy.
Many of the events what are being unravelled now has been discussed in this blog earlier. Please click the links for details
http://www.financialstrategyonline.com/2011/12/rbis-smart-moves-taking-india-down.html
http://www.financialstrategyonline.com/2012/06/indian-economy-under-attack-sleepy.html
http://www.financialstrategyonline.com/2012/04/daughter-in-law-trying-to-imitate.html
On another blog post dated 21 Oct 2011 Financial Thoughts had screamed as follows:
“Those who support further indiscriminate rate hikes must go back to US in 2006 when US Fed was blindly hiking the rates in pursuit of a mirage, which achieved nothing but a fantastic economic collapse in 2008”
Now let us wait for the new RBI Governor who will take charge next month.
The Govt. should not have extended the term of Subbarao as RBI Governer during Sept. 2013. Then the current currency crisis could have been avoided - whilst some depreciation in Indian Rupee would have been unavoidable due to the recovery in the USA, the sharp fall from Rs 45 to Rs 64 levels could have avoided by ensuring economic growth of 6.5% (i.e. by maintaining lower interest rates).
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