The Indian rupee made a fresh lifetime low for the third session in a row this morning, slumping to Rs14.94 against the UAE dirham (Rs54.88 for $1) at 10.40am UAE time (6.40am GMT).
This is the third session in a row that the rupee has managed to dig itself deeper in the ground against the UAE dirham (which is straight pegged to the strengthening US dollar), much to the liking of the 1.75 million non-resident Indians (NRIs) in the UAE.
The rupee broke the 15-barrier against the Qatari riyal for the first time ever today, and is trading within shouting distance of the magical 15-mark against the UAE dirham and the 200-mark against the Kuwaiti dinar.
Indeed, currency exchange houses across the country and rest of the Gulf region saw Indian expats flocking to take advantage of the best ever exchange rate they are being offered against the dirhams, dinars and riyals.
Analysts are predicting further declines in the battered rupee, citing it as a symptom of India’s deteriorating economic malaise.
While the Indian Finance Minister has cited euro zone’s troubles as the reasons behind the Indian currency’s latest debacles, economists and experts have no doubt that it is India’s own flawed economic fundamentals that are responsible for this decline, and therefore won’t get reversed until measures to bridge the widening fiscal deficit start reaping fruits.
The Indian stock market has lost in tandem with the rupee, proving a double-whammy for foreign institutions invested in India.
Intervention by the country’s central bank, the Reserve Bank of India (RBI), seems to have made no impact on the rupee’s slide, with the leaders of the main opposition party reminding the government of the humiliation of 1991, when a similar balance of payment problem force the opening up of Indian economy.
While some of the other emerging economies such as China too face the same troubles, India’s woes are accentuated by poor and in fact deficient policymaking on the part of a fractured government at the centre.
Reliance on its political allies for survival in the government has meant that the ruling Congress party has not been able to undertake any economic reforms of substantial nature to counter the growing fiscal imbalance, leading foreign investors to flee in droves.