It’s not just about depreciating R

The steep downward movement in the rupee’s exchange rate over the past month has created a big scare all around and may have undermined the confidence of potential investors, both foreign and domestic, in ways that we are yet to understand. The rupee has depreciated about 26% year to date, and the steepest decline was seen over the past few weeks as the exchange rate breached the R56 to a dollar mark. From here on, it seems like open season on the rupee as banks and brokerages are loosely talking about R60 to a dollar with a sense of inevitability. This is the real damage done to the underlying confidence in India’s economy.

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