Buy gold! Nothing can stop the plunging rupee!
A vicious cycle? India’s obsession with gold is one reason the rupee won’t stop plunging.
The rupee keeps plummeting, and there's nothing anybody can do about it, because Indians are obsessed with gold and the price of oil imports keeps climbing, Business Today reports.
Yep. Last year you got a measly 45 rupees for your dollar. And just a few weeks ago I was using 50 rupees to the dollar for a nice round conversion. Now the bean counters are talking about 55.
One upside, of course, is that means all of India is 20 percent off for American visitors, and I got an inadvertent 20 percent raise this year thanks to the inscrutable gods of finance (though my Indian investments also plunged 20 percent, if I need to turn them into hard currency anytime soon).
But the downside is pretty grim, according to BT.
Even though an ever cheaper rupee should make Indian exports attractive, for instance, For 2011/12, India's trade deficit is estimated at $184.92 billion – nearly 56 percent higher than the previous year's $118.63 billion, the magazine writes.
At the same time, the plunging rupee makes oil more expensive, which means higher inflation. So everything's getting more expensive — and fast. And that means everything. From instant noodles to a new car. And sending your kid to Yale or taking a trip to the Grand Canyon? Forget about it.
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