Rupee in free fall

With the rupee continuing to fall and touching Rs 52.73 to the dollar on Tuesday, the Union Government is in a quandary on what should be done to halt the slide. While it cannot ignore the cascading impact of the weakening rupee on the economy, there is little that it can really do to firm up the national currency’s value. Realising the limitations of a monetary intervention at a time when the dollar is gaining from a combination of factors, including the Eurozone crisis over which India has no control, Union Minister for Finance Pranab Mukherjee has ruled out the possibility of the Reserve Bank of India wading in to rescue the rupee.

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