Two months ago this chronicle was devoted to the Budget, while the April edition centred on the RBI. This time around Fearful Symmetry is most interested in the parlous state of external financing, which has manifested itself in stark bilateral weakness of the rupee against the US dollar, substantial trade weighted depreciation and a range of troubles in the real economy. March quarter GDP, released in the hours before Fearful Symmetry went to press, will also be reviewed.
The facts are these: since the middle of 2011 the rupee has weakened by more than a fifth against the US dollar and by more than a quarter against the yen. Even the hapless euro has made headway against the rupee. Outside of a spike from Dec-Feb inspired by the ECB’s LTRO #1 and a rise in FII debt quotas, net inflows have been negative since August.
