Indian Rupee at 14-Month Low

The Indian Rupee has fallen to a 14-month low as a result of the sagging Indian stock market and surging inflation. Foreign investors have withdrawn $5.7 Billion from the Indian stock market in the first half of 2008, reinforcing the 30% drop in stock prices that occurred over the same time period. Meanwhile, the nation’s benchmark inflation rate has risen to the highest level in nearly 13

years, and investors are clamoring for the Royal Bank of India to do more. The RBI has already raised interest rates as well as intervening on the Rupee’s behalf in forex markets, as indicated by data on the RBI’s foreign exchange reserves. Both moves were explicitly aimed at combating inflation, but may also carry the unavoidable consequence of stunted economic growth. The Rupee will likely continue to be caught in the slipstream. Bloomberg News reports:

"The rupee is under pressure to weaken because the losses in the stock market are raising concern about capital outflows. The currency could fall further if not for support from the central bank.”

Read More: India’s Rupee Falls to Near 14-Month Low on Stock Market Losses