A flexible approach: Orderly rupee depreciation should be allowed

The rupee has a lot of catching up to do because its slide has been postponed when compared to its peer currencies and competitors

Last Friday, the rupee fell to an all-time low of 85.81 against the dollar during intraday trading. Since then, it has clawed back a little, but is holding in the vicinity of 85.7 to 85.8. This gradual slide in the past few weeks is a good sign. Such depreciation was long overdue, and it is welcome that the Reserve Bank of India (RBI) is now willing to allow it to happen. The financial markets should not be allowed to think that the RBI is maintaining any sort of unofficial peg to a particular dollar value. The central bank has itself