Letters: Beyond the rupee

This refers to the editorial "Manage a depreciation" (October 16). A declining global economy has stalled trade, though there are signs of a delicate global recovery. The US, after six years of struggle, is forecast to grow three per cent in 2014 and Japan, after two decades, at 1.8 per cent. China will touch around seven per cent in 2014-15, while Brazil, Russia and India are in contention to regain their lost growth trajectory with structural reforms. But the same cannot be said for the euro zone. Germany, on a decline, may yet see fair growth this year but Italy, France and Spain could remain very weak. Therefore, the key to enhanced world trade and global economic re-balancing, lies in the revival of the European Union's economy.

The editorial is a timely reminder on the need to depreciate the rupee when every nation will be desperate to drive their own exports. China had long undervalued the renminbi against protests by other nations to amass its huge dollar reserves. Apart from the economic clout it had developed through mass manufacturing, it had the foresight to put in place widespread infrastructure as a vital enabler. We may manipulate the rupee, only to get stuck shortly thereafter in an awning gap.

R Narayanan Ghaziabad

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