High current account deficit and huge gold imports, decline in foreign reserves and withdrawal of investors from Indian market are some of the reasons behind the sharp fall in rupee, reports Rediff.com's Faisal Kidwai
The rupee, which fell to an all-time low of 58.98 against dollar on Tuesday, recovered by 19 paise to 58.20 against the dollar in early trade on Wednesday.
The government and Reserve Bank of India should allow the rupee to find its own level, says Anil Bhansali, Vice-President, Markets, Mecklai Financial.
He says one of the steps the government can take to boost the rupee is to remove the bottlenecks in foreign direct investment and foreign institutional investments as that would make India an attractive destination for investors.
“Until our exports/invisibles increase significantly and as long as we are dependent on foreign flows for our current account deficit funding, the rupee will continue to depreciate significantly,” says Bhansali.
There is not only a need to implement better policies to boost exports, but we should also focus on improving the quality of products we manufacture so that we can compete with other countries,
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