Strengthening Of Dollar Overseas
The strengthening of dollar is beyond Government’s control which is ultimately hammering the Indian currency. Gradual recovery in US economy coupled with rising expectations that Federal Reserve will withdraw its stimulus package soon is underpinning the US Dollar Index.
Poor Economic Growth
The Gross Domestic Product (GDP) has hit its lowest patch in the last 10 years. With fall of the GDP to 4.8%, it had significant effect on the stock markets and the falling rupee. The manufacturing, mining and the agricultural sectors have faltered and investors have become cautious of investing in India.
Why is Raghuram Rajan A Rockstar
I'm here to run the bank and not win Facebook 'likes' - Raghuram Rajan
He's been hailed in the press as some kind of good-looking guru, a monetary James Bond who just after two weeks on the job, surprised the world by boosting the health of Indian economy. Mr Rajan was one of the first economists in the world to warn about the global financial crisis that unfolded in 2007-08 and one that the world is still recovering from.
He sworn in as 23rd Governer of RBI on 4th September 2013 succeeding Duwuri Subbarao. This Tamil lad, 50 now, graduated from IIT Delhi (won the Director's Gold Medal for best all-round achievement) with a bachelor's degree in Electrical Engineering, and completed the Post Graduate Diploma in Business Administration at IIM Ahmedabad (gold medalist). He received a PhD in management from MIT for his thesis titled "Essays on Banking".
Rajan Effect
The inflow continuity after Rajan sworn in as a Governer sore up the Sensex bucking up the value of rupee. This is coined as 'Rajan Effect' by economy pundits.
Rajan allowed banks to exchange dollar denominated FCNR(B) deposits for rupees and also raised the overseas borrowing limit for banks. He has unveiled plans to liberalise the country's banking sector by allowing them to open up branches without seeking prior approval from the central bank, and intends to help free up more cash for banks to lend to the productive sectors of the economy. Some analysts say he's overrated for the rise in rupee as reasons like sharp fall in gold imports and easing of the Syria crisis have lifted markets up. Amidst all the challenges that lay ahead of him, Rajan continues to radiate a strong sentiment of hope. May the force be with him!
The Indian rupee slid from 46.15/dollar in August 29, 2011 to 68.75/dollar in August 28, 2013-- a plunge of whopping 49 percent.
Rajan was awarded the Deutsche Bank Prize for Financial Economics 2013 on 26 September 2013 for his "ground-breaking research work which influenced financial and macro-economic policies around the world".
Sources: The Economist, Avant Garde, FirstPost, BBC News
SEPTEMBER, 2013 7
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