It is high time that we got our act together and combat the fall of rupee as a pro active action plan can only arrest the fall of rupee against the dollar. Even Finance Minister has also suggested that RBI should not try to arrest the fall of rupee in Forex Market in India as it may be counter productive and RBI in its efforts may run out of dollar reserves.
The action plan for arresting the fall of rupee are as appended below:
- Allow foreigners to invest in Indian shares directly.
- Liberalize the NRE interest rate. Already RBI has delinked the NRE deposit rates and banks can decide their own rates and we have seen banks increasing NRE rates from 3.5% to up to 9.5%.
- FDI in multi brand retail be allowed.
- Incentive for exports to boost exports in India.
We need to have long term plans for fundamental improvements in the system that attracts foreign inflows as it is not an overnight panacea to attract dollars as Fiis are wary of investment in India in present scenario. Check out state of Indian debt here.
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