Among the steps debated by policymakers on Thursday were monetizing the country's stash of gold and lowering fuel consumption to reduce import demand.
Prime Minister Manmohan Singh will speak out about the Indian rupee on Friday. Most compelling is the suggestion that buying gold from the Indian people strengthen the rupee. Surging prices in both oil and gold have put pressure on the government to act. Oil is the largest import for India.
Indians were buying gold at such a high rate that the government instituted an import ban. They also tried to raise the price of fuel to curb demand to no avail. It is up to the central bank, but the monetization of the countries gold reserves or that of its people may be done in order that they can meet their debt obligations.
The Indian rupee has been the official currency of India since 1947, when the country achieved its independence. The exchange rate is derived mostly from its relationship to the US dollar. The exchange rate has steadily increased since 2007. It currently takes nearly 68 rupees to buy one dollar.
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