Rupee at 64 against $: The cause and effect of currency appreciation

Are we in the midst of a classic feedback loop of portfolio flows leading to rising share prices

The recent appreciation of the rupee in nominal, and even more so in real, terms against the currencies of our major trading partners, is expected to continue. A recent poll by The Economic Times (April 11) suggests that it may surge to Rs 63 per dollar in a month’s time. Our esteemed minister for commerce and industry (and apparently some other members of the government) seems to believe that the underlying reason is “second generation reforms” like the goods and services tax etc undertaken by the National Democratic Alliance (NDA) government, and that the “exchange rate alone cannot be the