Raging rupee: 

Raging rupee: 

Context:

• With the considerable good performance of the Indian rupee, The RBI should resist the exporters’ argument for making the rupee cheaper.

Current Scenario:

• The Indian rupee has turned out to be one of the best-performing currencies in the world with a gain of well over 6% against the U.S. dollar this year to date.
• In fact, the currency hit a two-year high of 63.60, supported by strong inflows of foreign capital.

The concern:

• Worries about the impact of a strong rupee on exports have risen — particularly in sectors such as pharma and information technology.
• The question is whether it is sufficient reason to experiment with the value of the currency in a way that makes it expensive for Indians to import goods.

Suggestion:

• Exporters should be pushed to adapt to the uncertainties of doing business across borders.
• And the rupee’s improving external value should be seen, at least in part, as a reflection of the improving quality of the currency.
• At the same time, going forward, tighter monetary policy in the West will invariably exert more pressure on the rupee.
• The RBI would then have to muster greater will to let the rupee find its natural value.