Why Rupee Continues to Slide While Forex and Gold Reserves are at All Time High
Reserves are a safety net, not a magic shield. The rupee's value relies on global dollar strength. It is also influenced by India's trade and capital flows. Policy choices on intervention levels play a role too. Key points to understand: Record reserves do not imply guaranteed strong rupee; they only mean India can handle shocks better. A weaker rupee can be partly deliberate, supporting exports and absorbing global pressures. Gold and valuation gains can inflate reserve numbers even when underlying vulnerabilities remain. The rupee can weaken even when forex and gold reserves are at record highs. The exchange rate is…
