Well, ask me! Since most of my earnings come from abroad, the rising rupee value means less money for me. But instead ruing the fact I’m trying to earn more. In the macro-economics terms the rising rupee may render the RBI poorer. The link says:
A strong rupee, which adversely impacts exporters earnings, could also leave the Reserve Bank of India poorer. Any appreciation in the rupee results in an erosion in the value of RBIs foreign exchange reserves in its balance sheet.
This is paradoxical. Doesn’t a rising rupee mean a healthier Indian economy? And this puzzles me:
The only way out for the central bank could be to resume its intervention in the forex market, by mopping up dollars to prevent the rupee from rising further,??? said Mr Barua. The Kotak Mahindra Bank report foresees that the central bank would resume its intervention in the foreign exchange market, prior to June 30, probably also to shore up its CGRA before its year closes.
Can someone throw some light on this in the comments section?
[tags]economics, indian economy, rupee value, rising rupee[/tags]