The rise of the rupee against the dollar has been making headline news over the past couple of months. And the immediate challenge before Indian companies (exporters in particular) has been how to deal with a weak dollar.
But it is perhaps time for both Indian policymakers and companies to look beyond the dollar. A new research paper by Deutsche Bank economist Werner Becker says the euro is growing in importance as a global reserve currency. He says the euro’s share of the total reserves held by various central banks climbed from 18% in the early months of 1999 to 25% at the end of 2003.
And he expects this to go up further to touch a level anywhere between 30% and 40% by 2010—that is, in another three years.
If this forecast is correct, then it is high time Indians started taking the movements in the value of the euro more seriously as well. Will we have to move away from our current dollar fixation?