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It gives me great pleasure to share that the overall approach of the govt to reduce INR liquidity in the market has started bearing fruit. As a part of an overall plan that has been in motion from last 4 months (from the time of Devoid as the MoF), we have been removing INR from the market thru monthly taxes and targeted buying of the INR thru our central Banks. There has been a deliberate decision to ensure that the INR thus sucked out of the economy is not pushed back in thru its use in the Money market or in purchasing goods for the Govt/Military.

This has had an effect of removing over 45 K INR (about 25% of the total INR issued till date) from the market which is now reflected in our INR Bank balance which has gone up from 40 K in Feb to 80+ k in April without any additional issuance of the currency.

This has resulted in a shift in the Demand supply equation in the market, making the Rupee dearer and higher priced. This is reflected in the fact that today, while currencies like USD and CNY are on a downward trajectory and are hovering around 0.005 mark, INR is actually showing an upward trend and has risen from its bottom of 0.005 to 0.008 today.

This is surely not a final situation. The valuations will keep moving up and down depending on the situation and while there are a lot of changes in the over all situation expected due to the recent upgrades in the economy module, the basic fundamentals of demand and supply will continue to drive the currency valuations.

So as long as we
1. Keep the import export balance in control
2. Ensure fiscal prudence in terms of Currency printing
3. Ensure prudent usage of work boosters by evaluating their actual benefit to the economy vis - a - vis their cost


we should be able to keep our head above the water despite a continuously changing economic environment

More later


cheers and happy gaming

Graf Sprat

VP and MoF - eIndia