Don’t try to control the rupee

Quantitative easing by the US Federal Reserve has been accompanied by high volatility in global financial markets. Most emerging market currencies have witnessed volatility since 2010. The rupee has been among them. In recent days the rupee has moved towards the level of 60 to a dollar. Figure 1 shows that while the Chinese renminbi has remained strong, other emerging economy currencies like those of Turkey, Brazil, South Africa and India have all depreciated in recent times, with most of them seeing a similar amount of depreciation.

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