The Collapsing Dollar

Published on July 27, 2007

Putting the recent appreciation of the INR in perspective.

Why should the RBI not intervene? Currency risk happens to be just one of the many risks that companies face. Some companies would be smart enough to figure out the underlying currency drivers and create a strategy to benefit from the same; and some companies would lose by not understanding the issues involved. It’s not the job of the RBI to interfere in what is essentially a market function that separates the winners and losers. By interfering in the currency markets, not only do they reward the weaker companies, they end up penalizing the companies that have understood the currency trends.