Indian Rupee – Worrying For Indian Government:
Indian Government Management is worrying about the fall of Indian Rupee[INR], earmarked more than Rs. 60/US Dollar. This is not due to outflow of Foreign Direct Investment’s[FDI’s] nor Foreign Institutional Investment’s[FII’s]. The main reason for this crisis is the Indian Government Management stopped Financial Reforms in the mid-2008 and keep on gaining the benefits from the past reforms. The economy was growing at about 9% and Management thought that it will continue without doing any reforms. Reserve Bank of India Management was trying to bring the interest rate down as inflation eases, but due to heavy fluctuation of Indian Rupee, they put a cap for overnight borrowing till Rs. 75000 cr. If the BankingManagement want to borrow more, they have to purchase at the rate of 10.25%. To curb the excess money in the market, Reserve Bank Management is trying to issue Government Bonds worth Rs. 12,000 cr. Bank Rate had been increased to 10.25% from 8.25%. The Government a