From less than `.40 to the dollar in
April 2008 the rupee fell to historic low of 58.2 to the dollar on 11th June
2013. Weakness of the rupee is a result of a deterioration of India’s economic
performance, especially the deterioration of its balance of payments. When the
rupee hit 58 to the dollar, Finance Ministry chose to appear in public to
declare there is no need to panic. But it is perhaps the time they themselves
panicked and did something in the short run to correct the deterioration of
India’s balance of payments.
The Reserve Bank of India took measures to
increase the supply of dollars in the market including asking exporters to
realise their dollar earnings and get them back into the country within one
year to support a plunging rupee.
The apex bank also hastened the process of
dollar inflows through online payment channels by increasing the amount that
exporters can bring back to $10,000 from $3000. The new norms will be
applicable with immediate effect, the RBI said.
These are the first few steps taken by the
RBI to send a signal of its intention to protect the rupee through
administrative measures.
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