Rupee ought to weaken to boost exports, complement growth momentum: Mythili Bhusnurmath

In a chat with ET Now, Mythili Bhusnurmath, Consulting Editor of ET NOW, shares her views on rupee, economy. Excerpts:



ET Now: For all the talk around how the natural course of the rupee should be southwards, somehow it has been remarkably resilient despite foreign flows not being in India’s favour. How long can it last?

Mythili Bhusnurmath: In country like India where exchange rates are purely a function of capital flows, it is difficult to make a prediction in this area. We are seeing strong capital flows, but the fact is that the rupee looks strong. This is partly because other emerging markets, especially countries like Turkey and Indonesia, no longer look as attractive as before. Relative strength of the rupee must be seen in light of that because given our macro-economic fundamentals, India is in line with improvement. Investors overseas still see us doing better from a domestic perspective. That is partly why the Indian rupee has not weakened, even when it should have weakened because it is hurting our exports. We really need to allow the rupee to weaken because unless the domestic demand is supplemented by external demand, you are not going to see the growth momentum that we really need. So, the rupee ought to weaken and it has not weakened as much as it should have.