Forex Blog: Currency Trading News & Analysis.

February 27th 2008

Rupee Will Face Test in 2008

While the Chinese Yuan quickly ascended the ranks of the world’s most important currencies, the Indian Rupee has not yet made it.  But that might change in 2008, as the Royal Bank of India ("RBI") will be forced to decide between a more valuable rupee and price stability.  Until now, the RBI has successfully pursued the "impossible trinity of a fixed exchange rate, independent monetary policy, and open capital account" through judicious use forex intervention and the issuance of sterilization bonds. Now, as prices are creeping up, the RBI has found itself constrained in its ability to hike rates because of the resulting pressure on its currency. Furthermore, the rupee has already begun to appreciate, costing jobs in certain export-dependent (and politically sensitive) industries. The Economic Times reports:

Monetary policymakers have been torn between letting the rupee appreciate and intervening in the currency markets to inject more rupee liquidity which could be potentially inflationary in nature.

Read More: Gazing through the crystal ball

SocialTwist Tell-a-Friend
Posted by Adam Kritzer | in Emerging Currencies | No Comments »

Sponsored Offers

FREE Daily Email Updates

Enter your email address:

Delivered by FeedBurner

Have Questions? Want to Share Your Review?

Be heard. Please share your reviews today!

Neighboring Posts

© 2004 - 2018 Forex Currency charts © their sources. While we aim to analyze and try to forceast the forex markets, none of what we publish should be taken as personalized investment advice. Forex exchange rates depend on many factors like monetary policy, currency inflation, and geo-political risks that may not be forseen. Forex trading & investing involves a significant risk of loss.