Look at the Economy world wide before you decide that Rupee strenghened. The fact is that most of the currencies gained against USD. The current economic situation is US not so encouraging and slowdown is expected to be continued. This is one of the main reasons why Rupee is seems to be strenghened. Ofcourse, the Indian economy is improving and making strides. RBI used to intevene in the EX mechanism for strategic reasons, Now it has every reason not to intervene
RE:Is rupee really strenghened
by Loan Shark on Oct 04, 2007 04:14 AM Permalink
US economy is actually very good. US is a developed country, so do not expect a GDP growth of 9% there as you would expect in a 3rd world (developing) country like India.
As for unemployment, it is very low at 4.5% and so is inflation - very tame despite high fuel prices. All this helped US to keep interest rates low and even lower recently due to credit crisis and mortgage defaults. Lower interest rates are not showing inflationary pressures.
All this makes, US currency unfavorable for investors and so the value of dollar is down. This is a calculated move by the US treasury. Both Snow and Polson favored a weak dollar policy. Polson even wants the Chinese to revalue their currency but China isn't playing ball.
Weak dollar means imports are expensive, more foreign tourists can come to USA and spend their money here and less Americans go to to expensive destinations in Europe.
