Key Points
Indranil Sengupta, Thematic Economist & Head of India Research, CLSA, says the dollar is strengthening and as a result, the rupee is weakening..
If the rupee has weakened to an extent, then you will not allow it to regain, you will want to buy FX reserves, because ultimately that is your only weapon in a volatile world...
Now, that is something we have to wait and watch because if the US core inflation does not settle at least at 0.3% month on month, which is 3.6% year on year, it is almost impossible for the Fed to cut..
The RBI's own forecast of inflation next year is 4.5%, which means that you are far higher on the real repo rate and that cannot but have an impact on growth at least in terms of GVA..
Indranil Sengupta: You have to understand that the Indian Central Bank would want to build forex reserves and keep the rupee relatively soft..
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