India’s currency could keep falling without failing us
The rupee is under a test and there are no textbook answers as global conditions as well as our vulnerabilities to external shocks differ from past episodes of sharp currency depreciation.
The Indian rupee has historically weakened against the US dollar, but bouts of volatility never fail to set alarm bells ringing. This time, they are particularly loud. The rupee plumbed 79.3 per dollar on 6 July, depreciating more than 5% in this fiscal year so far. The pace of depreciation, always a key concern, depends on the extent of the economy’s vulnerabilities and the potency of the external shock it faces, along with the timing and nature of policy action.
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