No line in the sand for the rupee

The inexorable weakening of the rupee finally took it beyond 60 to a dollar last week. Many had thought that this was a line in the sand that RBI would defend. Alas, that wasn’t to be. And despite some pullback, the market is now staring at the prospect of the rupee drifting lower. To be fair, RBI has consistently reminded us that it does not target any exchange rate level. True to its words, RBI has only minimally intervened or so-to slow the pace of depreciation not to prevent it.

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