The sliding pathway of Indian currency – alert for Asian traders

The phenomenal movement of Indian Rupee, which has followed a turbulent path during the recent times, is considered as the worst performance among all the currencies of the world. According to Credit Agricole and WestPac Banking Corp or WBC, the strategy of the Indian government to strengthen the currency by enhancing the method of borrowing offshore has not worked in favor; rather it is a failed mission in all respects. The volatility has existed since the last three months and the dwindling movements of the exchange rates has been the highest according to experts dealing with foreign currencies. In fact, the Finance Minister of India has stated while reacting to the plummeting action of the Indian currency that the Government expects to pump in $11 million through other liabilities than the rupee.

He has further gone in to state that in addition to the one mentioned above, the government has strong plans to make the overseas foreign loans less stringent and provide incentives to NRI’s for depositing foreign currency in the Indian banks. Besides this, the companies run by the state will also be made to sell offshore bonds. In response to this statement of the Indian Finance Minister, Palaniappan Chidambaram, a strategist of Credit Agricole has stated that enhancing the non rupee liabilities is perhaps a recommended action for restoring balance in the currency market although it is difficult to fathom whether such an action is going to work favorably at this stage when the reforms are improper and forex markets have lost their level of endurance since the fall of the Indian currency has been rated at 18 percent in the year 2013, which is the most unfortunate performance in Asia.

According to the Reserve Bank of India, this is certainly a matter of concern when considered in the perspective of forex trading and the Central Bank has marked this action as one of the greatest dangers at this time in India, which is the third largest economy in the continent of Asia. On the other hand, Morgan Stanley in a recent report of August 27 has provided the statistics for supporting the falling Indian Rupee and stated that around ten Indian companies that are already in deep debt have increased six times if data is collected from the year 2007and major corporate giants are in shortage of cash for paying their interests. The face of import is not positive, as well and currently stands at a little over five percent since 2007.

The domestic reasons can also be stated as one of the major reasons for this behavior of Indian currency although the rate with which the fall has occurred may be due to combined reasons. According to the report issued by Morgan Stanley, India, which was considered as one of the most emerging nations until recently has fallen down below expectations probably because the picture that was apparently available to the world had a hint of negativities at the backdrop. Although it is difficult to hold on to constructive predictions about the action of the rupee, the whole world is now eyeing at what the next move is likely to be in the near future.