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Charts & Analysis

Dollar Now at 61.7, Euro at 80.95; Looking Ominous

The dollar is at Rs. 61.1 61.7 and things look bleak again. Despite the cut in liquidity by the RBI, the dollar is hitting a new high against the rupee – and this is not a “failure” of the RBI measures, it is that such measures necessarily take a lot of time to act.

Updated: The dollar has gone to 61.7 now.

Rupee Dollar Short Term Chart

(Note: the last data point – for August 6 – is based on the current spot price reported at CCIL. The rest are RBI reference rates)

The Euro has been spiking even earlier  (Data till yesterday only, RBI)

Rupee Euro Long Term Chart

Source: RBI

Where does this go from here? The dollar should rise further in the near term.

Foreign fund flows stabilize the rupee, which, ordinarily, should depreciate a massive amount every year due to our import-export gap. Unless we fix that gap, we have to depend on foreign flows. For that, there will be a point where our exports are competitive, and even building that export capacity can take months or years.

The impact of a rising rupee is hugely on industry and jobs. Expect a recession before the rupee shows serious strength. And a recession in the real estate “cannot-go-down” industry as well.

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