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The Rupee

That Sinking Feeling, Again

The Rupee
Even as the rupee sank to an all-time low of Rs 36.70 to the dollar on January 31, Outloook commissioned MODE to carry out a snap opinion poll. Though the rupee eventually closed at Rs 36.45 to the dollar on January 31, thanks to the Reserve Bank of India's (RBI) firefighting operations, a majority of those polled said that the rupee would sink even lower. On February 1, the rupee had again fallen marginally and was quoting at Rs 36.64.

The telephonic poll was conducted in Delhi with a sample size of 39 exporters, importers, finance managers and bankers. Clearly, our respondents feel that the rupee will sink lower. A full three-fourths of them estimate that by March 31, the rupee will be quoting at more than 37 to a dollar. Our respondents aren't too impressed with the RBI either: as many as 67 per cent feel that it has not been efficient enough in controlling the rupee's slide. What about the Government? No, the fall of the rupee is not a deliberate move by North Block, say a majority.

At first glance, our respondents seem to be of the opinion that if the rupee is made fully convertible now, there will not be any significant extra downward pressure on its value. Thirty seven per cent of them think that the rupee will then quote at Rs 37 or lower. But look closely, and you will see that a significant block of respondents—23 per cent—believe that the free-floating rupee will be Rs 40 to a dollar or lower.

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