SuHail Asghar @SuHail_Asg - Twitter Profile

5 months ago

Top Economists Say Let the Rupee Fall Arvind Subramanian: 100 is almost necessary Arvind Panagariya: Overcome the psychology of 100 Raghuram Rajan: Let ₹ find its level Gita Gopinath: Let ₹ do its job D Subbarao: Let the ₹ fall Will RBI defend or is 100 coming? INSIGHTS Government’s Position Dr. V.A. Nageswaran Chief Economic Advisor, GOI May 12 / April 24 Stopping the rupee from falling further is one of the “central macro-economic imperatives” of FY27. India’s rupee is fundamentally “undervalued” (so investors should “buy” it.) RBI’s Interventions Reuters, May 20 Reuters spoke to four different bankers (names withheld), who said that RBI’s daily currency market intervention is $1 billion (estimated). This is slowing, but not halting the rupee’s slide. The RBI has been selling dollars every day in the past 10 days to relieve the pressure on the rupee, the bankers said. This has moderated the pace of losses, but not reversed them. What the Economists Say Dr. D. Subbarao Ex-RBI Governor, Top Economist May 20 / May 13 When you defend the rupee, the danger is not merely depletion of reserves; it is the credibility trap. If RBI interventions fail to arrest the rupee’s fall, market confidence can evaporate abruptly. A failed defence is worse than no defence. Exchange rate crises are not pretty. At heart, they are a crisis of confidence. If the fundamentals dictate the rupee should fall, then the RBI should let it fall. A weaker rupee is going to improve our export competitiveness. Dr. Arvind Panagariya Ex-Chairman, Finance Commission Ex-VC NITI Aayog, Top Economist May 21 Dear RBI, do not let the psychology of 100 per dollar determine your policy response. The right response at the moment is to let the rupee depreciate. Trying to defend the rupee will continue to bleed the reserves until they are exhausted. Even NRI bonds are like band-aid. You will eventually have to cross the psychological barrier of 100. Dr. Gita Gopinath Ex-Chief Economist, IMF May 21 / May 18 Currency depreciation forces you to cut back on imports (i.e., reduce your oil consumption, which is anyway the government’s goal.) If you try to intervene, all that happens is you lose your reserves. Let the rupee do its work. Dr. Arvind Subramanian Ex-Chief Economic Advisor, GOI Dec 29, 2025 Allow the rupee to gradually decline by 10% over the next few months. To catch up with Chinese export competitiveness, the rupee at 100 to the US dollar seems almost necessary. Dr. Raghuram Rajan Ex-RBI Governor, Top Economist Jan 25, 2025 There is no need to be overly concerned about the rupee’s big slide. I would let it find its level. Maybe some additional depreciation is useful for Indian exports. ENDQUOTE “Recognize reality even when you don’t like it. Especially when you don’t like it.” – Poor Charlie’s Almanac [Charlie Munger] @arabicatrader

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