Will the rupee harden further?

(D. H. Pai Panandiker is President of RPG Foundation. The views expressed in this column are his own)

By D. H. Pai Panandiker

In the last six months the rupee appreciated more than 6 per cent against the dollar.

That reflects more the weakening of the dollar against almost every currency.

A number of currencies appreciated more than the rupee. Brazilian real possibly made the highest jump with 18 per cent appreciation. More representative currency that reflects the plight of the dollar is euro. It was up 11 per cent.

The Asian currencies were slow to rise. Singapore dollar, Thai baht, and Malaysian ringgit appreciated less than 5 per cent. The Indonesian rupiah was an exception.

The reasons for the weakening of the dollar were three fold. First, the US economy delayed its recovery.

The second quarter numbers indicate that the economy is not yet out of recession. Even more depressing is unemployment which has now touched 10 per cent. The European Union has performed better, more so Germany and France.