76.87: The rupee’s new low against the dollar

Business Standard
24th April

76.87: The rupee’s new low against the dollar

  • The rupee hit a new low of 76.87 against the dollar on April 16, though it recovered some ground on Friday.
  • The primary reason for its decline was fresh concerns regarding delay in economic revival owing to the Covid-19 pandemic.
  • In recent months, foreign institutional investors (FIIs) have pulled money out of emerging economies and put it in safe dollar assets like treasury notes and bills.
  • This has led to the strengthening of the dollar in the short term. This trend may, however, not persist. With the US Federal Reserve launching a massive liquidity injection programme, the dollar may weaken in the future.
  • Any money that investors have in dollar-denominated assets, such as US funds (international mutual funds) or gold, will benefit from the weakening of the rupee against the dollar.

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A few links for further reading

Invest and emigrate

The great Indian dream of settling abroad is achievable if one has a few crores to invest. Rich nations offer a variety of investment options in a quid pro quo arrangement: immigrants get a better quality of life and revenue from them helps these countries’ finances. Wealthy Indians, troubled by polluted cities and the red tape holding up entrepreneurship, may want a quick ticket out of the country. Sanjay Kumar Singh lists a range of options: from a Canadian province’s investor programme to America’s US EB-5 plan.

Small savings schemes

Investors in small savings schemes breathed a sigh of relief when the government announced on October 1 that interest rates on these instruments would not be revised for the fourth quarter of the calendar year. With the economy witnessing a slowdown, and the stock markets also turning volatile, many investors are looking for alternative avenues to park their savings. Small savings schemes, with their sovereign guarantee, have emerged as a viable alternative.

Hard path to growth

The signals for the economy are not positive: overall demand is yet to pick up; the share of total exports in India’s GDP is declining, and industrial output pattern remains worrying.

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