Rupee Hits 4-Month High Versus US Dollar

on Sep 18, 2012
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The rupee hit its strongest level against the US dollar in four months, The Financial Times reported on 17 September, 2012.

Rupee Trading at 53.79 Against the Dollar
On Monday the Indian currency gained 51 paise and traded at 53.79 versus the US dollar with hopes of major foreign inflows after the federal government announced a series of economic reforms.
The “Big Bang” Move
Last week, India’s government announced a series of so-called “big bang” economic reforms, which included opening up of the aviation and multi-brand retail sectors to overseas direct investment. The reforms were aimed at reducing the state budget deficit at the expense of working people, attracting foreign investment, and spurring the reorganisation of key economic sectors so as to make them more profitable with the intention to attract fresh capital.

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**The Reforms Push for the Rupee**
The Indian government’s “big bang” reforms are expected to result in capital flows from overseas, which should also give a push to the currency.
“We see the recent measures as a positive step and have seen the rupee respond accordingly as offshore investors gain more confidence in policy makers’ ability to implement tough policies,” said the co-head of emerging market debt and currency at Investec Asset Management, Peter Eerdmans, for the FT. He added that the rupee may appreciate further.

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