India’s foreign exchange reserves have declined by $90 billion since January this year. The main two reasons for this are the increasing trade deficit and the Reserve Bank of India’s attempt to artificially handle the value of the rupee against the dollar.
It has been common knowledge in the market that the Reserve Bank has been putting dollars in the market from its reserves in an attempt to not allow the value of the rupee to fall below 80 per dollar.
Despite this, the circumstances have become such, in which this price has crossed 81. So now it has been reported in all the financial newspapers that from October, the Reserve Bank will change its policy and allow the value of the rupee to fall naturally according to the circumstances.
So on the whole, it turned out that at a time when dollar reserves have become very important all over the world, at that time the Reserve Bank spent it on a large scale for such a purpose, In which it has to surrender now.
Meanwhile, the Reserve Bank also took some contradictory steps.
For example, he allowed profitable companies to receive up to one billion dollars in lieu of rupees. Obviously, this further increased the demand for the dollar.
On the other hand, till now no measures have been taken like reducing the import of non-essential luxury items.
While the country also has debt repayment liabilities, which will have to be met through a large amount of dollars in the next seven months.
Apart from this, as the global situation continues to worsen, the future looks even more worrying in view of that.
In such a situation, the value of the rupee will fall, there is no other option but to accept this truth.
Therefore, if the Reserve Bank finally recovers from the artificial attempts to save the nose of the government, then it will be considered in the right direction.
Those will be the side effects of falling rupee. After all, the economy was not handled when the conditions were better, but bold steps were also taken to hurt it, so now what is the way out except to bear the consequences of them all together in bad times?