Rupee breaches 81, policy challenge: let it find its value or burn forex, hike rates

The Indian rupee breached the 81-mark against the US dollar for the first time on Friday, before settling at 80.98. The Reserve Bank of India has burnt forex reserves at a dramatic pace this calendar year to prevent exchange rate volatility. The government is keen to preserve GDP growth and create more jobs as several big states head for polls over the next 12-18 months. A depreciating rupee makes imports more expensive, and curbs demand, and makes it more expensive.

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