Last year around June I had written about the dollar plunge against the Rupee. For all the Indians living in U.S, it was one of the most concerning aspect as any remittances to India were nearly 15% lower.
Most of them were expecting Rupee to keep on appreciating and break even the 35 Rupee mark against the dollar. Till December of last year that trend remained intact, however 2008 seems to have taken a sudden U turn. After a gap of more than a year Rupee has depreciated to over 40 against the dollar, much to everyone’s surprise. Although it has been range-bound for last month or so, no one seems to be talking about 35 Rupee mark that was expected to hit as per most of the analysts.
Even though Indians holding dollars were not very happy during that time, quite a few Indian corporations made hay while the Sun shined. The number of acquisitions made by Indian companies were unprecedented. Due to stronger Rupee and weaker dollar, these companies could buy American/European companies at much cheaper price.
Although Rupee has not weakened to 45 rupee levels, some analysts now see this as possibility given the stock market crash and general slowdown in Indian economy.
I carried out a poll last year on what readers think about the Rupee dollar exchange rates. More than 620 people have participated in that poll and the votes are quite evenly distributed. Very difficult to gauge what is going to happen.
As of now, 22% of voters feel Rupee will depreciate to 43 and go even higher against dollar. 41% feel Rupee will stay below 40 and remain there. Whereas nearly 37% feel that Rupee will remain rangebound between 40 and 43 against the dollar.
What do you feel? Where will this Rupee-Dollar fight finally end?