Whats next for the Rupee?

In an earlier post way back in April, I had mentioned that the odds were very high for the rupee weakening.

Now that the Rupee has crashed to an all time low of around 55 Rs/$, whats next for the Rupee?

There are two distinct factors on the horizon which bode ill for the Rupee.

The first factor is that almost half of Indian reserves could vanish in the next one year.

The second factor is that FII inflows to date in Indian equities are still net positive.If they were to start selling like they did in 2008 because of geopolitical and other reasons, then the impact on the equity and currency markets would be dramatic

We are indeed living in interesting times !

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