main reason for the ruppes free fall against the us dollar 1.domestic and global reason.Among domestic reasons are high current account deficit and growth concerns. On the global front, the recovery in the US economy is expected to prompt the central bank there to end the loose monetary policy by the year end. Anticipating this, foreign investors are pulling out their money from India to invest it back in the US, which is resulting in a scarcity of dollars in India. This is not India specific. All emerging market currencies are witnessing a similar capital flight. US recovery is also boosting the dollar strength. 2. The intensity of the fall is surprising but the fall in itself was not surprising, said Sanjay Dutt of Quantum Securities. “Some of the measures taken by the RBI etc, haven’t seemed to have gone down well with the market participants who feel they are very inward looking and retrograde in a manner 3. The government has also raised import taxes on gold and silver in an attempt to narrow the burgeoning current account deficit. The import duty on gold was hiked to a record 10 percent, the third such increase in eight months, while duty on silver was hiked from 6 percent to 10 percent. The excise duty on gold bars was hiked to 9 per cent from 7 percent. The hike in duties came after Chidambaram said the government was looking to contain gold imports at 850 tonnes this fiscal year, after imports of 950 tonnes last year. However, as Firstpost said earlier, Chidambaram may be forced to introduce more curbs on gold if the 850-tonne limit is to be adhered to.
Posted on: Sat, 31 Aug 2013 09:52:06 +0000
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