Rupee Rises: Brings Good And Bad Tidings
Grappling with multiple concerns, the 12 per cent appreciation in rupee since
April 2007 and around 15 per cent since October 2006 has been both a boon as
well as a cause of concern for India. On the brighter side, the steep rupee
appreciation against a weakening dollar yielded downward pressure on inflation
and helped trim India's import bill. This helped to partly cushion India against
spiraling crude oil and fertilizer prices and eased the attempts to source
wheat, so as to create buffer stocks for domestic demand.
In a new report, global financial services major Goldman Sachs, however, states
that despite expectations of further rupee appreciation, inflation would go from
the current level of 3.75 per cent and an estimated 4.5 per cent for 2007-08 to
4.4 per cent in 2008-09, as loose liquidity passes through into price-rise.
One of the main reasons being that import-dependent India, which has for well
over a year not passed on to the consumers the full price impact of global crude
oil...
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