NEW DELHLI: The standard gold mint was Wednesday quoted at an all-time high of R.s 4,380 per ten grams at the close, while the prices of the 22-carat variety hit a new high of Rs4,015 per ten grams.

In the aftermath of the RBI’s decision to depreciate sharply the Indian rupee against major currencies, the standard gold mint price registered a whopping R.s 456 rise and R.s 648 last week. Similarly, the 22-carat gold rose by R.s 420 and R.s 595.

The depreciation of Indian currency affected trading in neighboring Nepal, where all trading activities came to a standstill Wednesday following the sharp downward revision of rupee.

All commercial banks, both in the government and private sectors, stopped all foreign exchange transactions since Wednesday morning.

Pakistani exporters in Islamabad said the sharp downward revision of the rupee was likely to hit Pakistani products in the international market since India was one of the major competitors.

A report from the port city of Karachi said with the depreciation of the Indian rupee and the appreciation of the Pakistani rupee against European currencies during the past few months. Pakistani products would become uncompetitive in the world market, particularly in the European countries.

The Samajwadi (socialist) Janata party charged Congress-I with taking “Ad Hoc and Piecemeal” economic measures and warned that such decisions “will derail the country’s economy”.

The federation of Indian exports organizations (FIEFO) however welcomed the devaluation step saying it was a practical step.

FIEFO president Ramu Deora said in Bombay with this devaluation and adjustment, an exporter would get more benefit in Indian rupee in his hands, particularly in the case of products which were least import intensive like processed foods, marine and agricultural products, pepper, tea, coffee, textiles and garments.

The president of the federation of Indian Chambers of Commerce and Industry (FICCI), S K Birla has called for making the rupee convertible, in view of the recent exchange rate adjustments of the Indian rupee.

“Considering the frequency and extent of adjustments the stage is now set for making the rupee convertible in the near future”, Birla said in his reaction to the downward revision in the value of the rupee.

This would mean a fundamental change in India’s exchange system, which would eventually put the country’s trade and payments position on a “much sounder footing”, Birla said.

The Communist Party of India (Marxist) said the two successive sharp devaluations of the rupee would fuel inflation, hike up prices of all essential commodities and “eat into the meager earnings of the working people who will be left defenseless when subsidies are also cut”.

The party polite bureau in a statement here said “.The next effect of the devaluation will be marginal in improving our export performance and trade balance and will be major in adversely affecting the livelihood of the people.”

Former finance ministers, Prof. Madhu Dandavate (National  Front) and Yashwant Sinha (Samajwadi Janata Party) deplored the depreciation of the rupee saying was done to suit the IMF conditions.

Prof. Dandavate said the depreciation of this order could not be considered as just a routine adjustment of the exchange rate by the RBI, “It approximates to the extent of devaluation that is expected to be proposed by the IMF as ane of its conditions for assistance to India”.

Former premier V.P. Singh’s Janata a the depreciation of rupee, the second less than two days, was an unmistakable indication of government’s cautious political decision to go in in for steep devaluation.

Party spokesman Jaipal Reddy said in Statement that it was equally clear that the step Was taken under the “unconcealed pressure of IMF”.

Article extracted from this publication >> July 12, 1991