Protect the rupee like the flag.

It is time for frenzy on the Indian rupee. All the time we have been writing that uncontrolled inflation, useless government spending and rising deficits will result in a fall of the rupee all the heavies were forecasting that the rupee will rise to 40 to the dollar, the only debate being about decimal points. Now the same experts are busy trying to predict where the fall will end. A few are still hallucinating about its recovery. " The Reserve Bank of India intervened at the intra-day low level and this helped the rupee recover. We see the rupee appreciating from here to reach 59 levels in a month," said a treasury official with a public sector bank. msn.com, 9 July. The rupee fell steeply when the Fed Chairman, Ben Bernanke hinted that the US will start cutting its bond buying program injecting $85 billion dollars per month into the banking system. They have not started cutting as yet so imagine what will happen if Bernanke, who is to speak this week, says that they will cut purchases to $75 billion per month, starting in September. That is a tiny cut of just $10 billion a month but it will surely send the rupee to below 65 to the dollar. As usual the Congress is blaming the " foreign hand " for this debacle saying that all emerging market currencies are falling. True, but the fall has been insignificant in countries where governments have kept inflation under control. Malaysia with an inflation rate of 1.7% has fallen by 3.6%, Indonesia with an inflation rate of 5.5% has fallen by just 2.2% while tiny Philippines with an inflation rate of 2.6% has fallen 6.8%. India with the highest inflation rate of 9.3% has fallen the most, by 11.7%. TOI, 10 July. This has nothing to do with any " foreign hand " but is entirely self created by the Congress by its wild social spending. The MNREGA scheme, forgiving of all loans to farmers, increasing civil service salaries by 80%, to win elections in 2009, has led to this. But the Congress is undaunted. It is going ahead with the Backward Region Grants costing Rs 750 billion and last week passed an ordinance for doling out cheap grains at a cost of Rs 2.5 trillion. The Turkish Lira has fallen by 7.2% and is predicted to fall further. The Turkish Prime Minister, Erdogan has won 3 elections by spending on social programs. Its inflation rate has risen to 8.3%, it has a high Current Account Deficit and unemployment rates are rising. The Turkish central bank is selling dollars to support the currency but experts predict further falls. Erdogan has accused foreign and domestic speculators and what he calls the " interest rate lobby ". Similar sins, similar excuses. It is our currency, just like the flag. Surely the government should respect and protect it?