Beaten down by the global economic crisis, the export oriented tiger economies of Asia have stopped roaring. From Japan, to South Korea,to Taiwan, China, India and beyond, the global economic crisis wreaked havoc.
The huge outflow of money from foreign investors and the high budgetary deficit run by the governments to revive the economy have put pressure on their respective domestic currencies.
After touching a new lifetime low of 52.18 intraday on Tuesday, the Indian currency marginally recovered to close at 51.97 against the dollar. Experts are of the view that India’s domestic currency relevant fundamentals are deteriorating.
“India has no material external debt overhang, unlike other Asian or European countries and foreign currency reserves seem adequate to cope with any threats to India’s external solvency. However, we have a negative view on the dollar-INR front on the uncertain outcome of the general elections in April and concern over sustainability of India’s public finances are putting pressure on domestic currency. Also the outflow from foreign players from stock markets is putting enormous pressure on the domestic currency,” said Jonathan Paul, principle economist at Krug and Bordman Global Advisory.