Currency Weakness Slows India's Imports
WASHINGTON - Dec 21/11 - SNS -- Major devaluation of India's rupee since the summer has slowed import demand for pulses and other products even though demand for both domestic and imported product is strong, notes the U.S. agricultural attache for the country.
"Since August 1, the Indian rupee has lost roughly 20% of its value relative to the U.S. dollar," the U.S. agricultural attache reports.
"The reasons for this are well known: first, the financial crisis of the euro zone has bid up the dollar globally as investors use the dollar as a safe haven, and second, the Reserve Bank of India had for some time reportedly decided not to support the rupee as the exchange rate fell.
"The Reserve Bank of India is holding $307 billion in foreign exchange reserves and would have needed to expend these reserves at the rate of $1 billion per working day to support the rupee directly."
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