20% Fall History

wealthymattersIn 2008, when Lehman Brothers imploded on September 15, the Rupee, which had by then slipped a bit from its sub-39 all-time high to around 41, fell sharply and by the time the music really stopped, about 3 or 4 months in, to over 50 to the dollar, a decline of 20%.

In August 2011, when the US debt downgrade followed by the exploding of the European sovereign debt crisis (courtesy Greece) hit emerging markets like a bomb,the Rupee, which had been hovering between 44 and 46 for several months – during which, incidentally, both exports and imports were growing like gangbusters – collapsed in a near-straight line, triggering RBI action on December 15, tightening rules and squeezing liquidity. When the dust had cleared – or so it seemed – the rupee had lost over 20% and there was blood all over corporate balance sheets (and, of course, profit and loss statements). The banking system is still recovering from this.

This time round,the fall so far is just half of that in the previous two cases.


The Rupee Debauchery

 I found it well worth preserving on my blog/electronic scrap-book.The highlighted portion is stuff I find worth remembering.
Way back in 1957 Ayn Rand in her magnum opus showed the world as to what happens when the looting runs dry. When the government starts to trample over the productive society and re-distribute wealth it can certainly make some quick electoral gains but soon the nation is driven out of its vitality and resources; very soon there is nothing left for the government to re-distribute.
The sharp depreciation in the currency, a falling growth and rising inflation are just some signal towards such a scenario and to blame it like every other piece of internal economic travesty on some distant western country is an attempt to run away from reality.
The Indian rupee has been among the three worst performing currencies vis a vis the dollar in the past one year.  That is indeed quite an achievement considering that all our South Asian neighbours have done better than us. Read more of this post
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