Someone with better knowledge please help me understand better but I think the rupee sliding as it has been is going to create more problems in the long run. One one hand the rupee is falling dramatically which is good for the export, but high inflation takes away from the PPP advantage that we have in dollar terms. Whatever the price of rupee, we will get adjusted to it. If the rupee rises and the inflation remains high, it will make us totally uncompetitive internationally and erode the PPP advantage that we have. On the other hand, if the rupee stays undervalued, import costs will be high which means our oil import bills will remain high and keep cost of transportation high which will add to inflation. It's a bloody vicious cycle. What I have understood is that the falling rupee has not helped India in any way as far as exports go as we have hardly seen a boom in export. On the other hand, we have seen our oil import bill go through the roof an just today I have heard that a Rs. 5 hike on petrol and Rs. 3 on diesel is in the offing. This will increase the cost of food as transport cost will increase. Problem is, RBI seems to be helpless in pulling back the currency and we may be doomed with an undervalued currency for a very long time. If the 55 mark is breached, we may see the rupee go all the way to 58. We are looking at some tough times in the economy. sadly nobody seems to have a clue as to what to do about it.