Readers would recall that we had dealt with in quite considerable details how depreciation of Indian Rupee to new low on continuing basis for some time has benefited our exporting community, Realizing that this phenomenon is not going to last for ever - not even for a long time - we must take this fact into account, while projecting our garment export trajectory. The things have of late been taken up seriously by RBI, with a new Governor taking up the mantle.

Indian Rupee has been in turbulence for quite sometime and has shown its extreme sensitivity not only to fluctuating moods of FII investors, but also to decisions taken by US Fed on whether, how much and when to taper off QE3. This should make our policy framers aware of the fragility of our forex reserves, requiring us to be on a constant watch on our Current Account Deficit. Of late, there has been high degree of volatility in value of Indian Rupee which has sent shock waves across trade and industry. Nobody gains from such volatility, as admitted by person no less than Commerce Minister himself. Garment exporters, at their own level, have been agitated on this issue, which has been discussed in considerable details in our earlier issues.

With this unexpected depreciation of Indian Rupee, almost on daily or even hourly basis, garment exporters did gain as this brought in more rupees for every US Dollar they had earned on their consignments sent earlier. But, they still knew in heart of their hearts that it is not going to last long. They also knew that depreciation of Indian Rupee, if it gets stabilized, would attract its own set of problems, including higher cost of imported materials and accessories, apart from international buyers who would not fail to ask for their pound of flesh. Luckily, this situation did not last long and Indian Rupee was seen receding in depreciation. The exporters also knew that despite its recent rebound, Indian Rupee is still quite undervalued.

This is here that Raghuram Rajan, the new Governor of RBI has stepped in. There was an expectation that he would, unlike his predecessor Subbarao, would yield to Government dictat to reduce interest rate, in keeping up with Government decision of preferring development over inflation. But that did not happen.

The measures announced by Rajan were well-received by markets with rupee recovering by 3.5 per cent between September 3 and 6. Markets cheered slew of proposals by Rajan, aimed at strengthening rupee and reviving growth, for third straight day as investors appeared bullish. Against close of 66.01 on one day, the rupee on next day ended at 65.24 the highest level in nearly 2 weeks - on heavy dollar selling, capital flows and weak American currency overseas. This is strongest closing that marks over 5 per cent appreciation from record low of68.80 hit on August 28. Analysts and heads of treasuries at banks have opined that "the Rajan effect''' - the impact of the measures unveiled by new Reserve Bank Governor Raghuram Rajan - will continue to play out in forex market for sometime.