Calls to weaken rupee are misguided
Those batting for a lower policy rate and/or a weaker rupee are concerned primarily with the interests of domestic Indian industry, not consumers or the economy
Rather like Goldilocks, commentators on the Indian rupee don’t like the value of the currency too low or too high—they would like it just right. Thus, when the rupee is weak, there are complaints that it is too weak; with a strong rupee, there are complaints that it is too strong. It is understandable that industry shills should press for a weakening of the rupee. But it is not just those with a vested interest in promoting domestic industry who are crying foul— eminent economists have now joined the fray. In this newspaper, former chief economic adviser Deepak Nayyar and economist Ajit Ranade have batted for a weaker rupee in the past few weeks. Nayyar, in particular, is explicit that this is best achieved through lowering the policy interest rate, which, it is alleged, is too high.