- Didn’t seem too worried
Nice of the prime minister to try and soothe investor nerves after the historic collapse of the local currency. But he didn’t quite spell out how the situation, and people’s investments, will be salvaged. Instead, it was as if the call for calm was followed by a section of one of his speeches when he was still in the opposition. Other arms of his government, meantime, were trying to put out this fire of uncertainty engulfing the market in different ways. There has also been an assurance, if the press is to be trusted, that such devaluations will not be repeated in future.
Yet that still does not fully explain what happened late last week. After plunging to a historic low of 144 to the dollar, how exactly did the rupee claw its way back to the 139 mark? Since there’s no credible explanation from official sources investors will hopefully be forgiven for leaning towards the grapevine. And that, fortunately or unfortunately, speaks of panic in the state bank as the nosedive worsened. And then, contrary to what they’ve been preaching these past few months, the government green-lighted dumping the dollar to prop up the rupee a little. If that is so, one can only imagine the health of the foreign exchange reserves that the prime minister himself has been trying to beef up, in the most unorthodox ways at times, ever since he took office.
The PM must understand that no matter what he says to potential investors, they will still take their cue from on-ground market reality. And when you speak of the hundreds of millions coming in, you must also be mindful of the steps investors are likely to take when they see such unwarranted volatility in the economy. The stock market crash of the past few months should have made the government realise, however late, that investors despise uncertainty even more than bad news. And you just can’t manufacture fake financial news.