Ease the peg
We have seen this movie before. All through 2007, until March 15, it looked as if the RBI was stuck on Rs 44 per dollar. But it suddenly gave way, and by April 6, the rupee has risen to about Rs 40 per dollar. This led to distress amongst exporters, who had not prepared for this turbulence. Speculators who had bet on a rupee rise profited handsomely. What is needed now is not just a shift from Rs 40 to about Rs 36 per dollar, but also a new policy framework, instead of lurching from one crisis to the next. The two key elements of this new framework should be transparency and exchange rate flexibility. As of now, the RBI’s currency trades are reported only once a month, and that too with a
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