When will RBI face the truth?

30 Nov 2011

1

If  its growth had slackened,  he said,  it was only because of the global financial crisis. His explanation is less than credible.

The rupee has plunged inspite of  18 months of rising interest rates.  In open, or largely open economies,  rising  interest rates normally make  the exchange rate go the other way.

What is more,  money that is in search of safer havens is fleeing the Euro and is not going into the dollar, for the dollar has fallen by  eight per cent against the euro since July.

Instead it has rushed into the Japanese yen, Swiss Francs, Brazilian escudos, and even the Thai Baht despite Thailand's political woes.

Why is not even a trickle  coming to India? And why is the money  being pulled out of the stock markets?

The inescapable truth is that investors are pulling out of India because they have lost confidence in India's immediate future.

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