The rupee and foreign reserves: The larger story

It is argued that we should let the rupee find its own level - more so, when many other currencies are depreciating against the dollar. The low values of these currencies, however, are not sustainable

The price of a dollar is now around Rs 82. This is in the aftermath of the Fed policy in the US this year to raise the federal funds rate sharply from 0.25 per cent in March to 3.25 per cent in September. Other factors like oil prices have not helped either. The Reserve Bank of India (RBI) did intervene and the foreign exchange reserves fell by $104.93 billion by September 23 this year from an all-time high of $642.45 billion on September 3, 2021. But this depiction hides more than it reveals. We need to consider three aspects.

First, besides