CHENNAI: In the past 10 days, the Indian currency has given all kinds of jitters to the policymakers, as the rupee hit a record low despite the government’s move to discourage gold imports. The question that currently haunts investors and non-resident Indians is whether the rupee will further weaken or will it get strengthened.

The fact that the high currency volatility may even force the Reserve Bank of India to keep the policy rates same and to avoid cutting down interest rates, when they meet on Monday, has further added apprehension about the rupee’s strength.

The weakening of rupee is not due to domestic factors alone and external factors have also contributed much to the slide. One of the primary reasons is a recent upgrade in rating of the United States by Standard & Poor’s to stable from negative to represent an improved outlook on both economic, as well as fiscal fronts. The rating change also suggests that in the next two years there is a less chance of a downgrade threat.

While the rating upgrade was a shot in the arm for the largest economy of the world, it has indirectly dealt a blow to currencies of the emerging markets. It has strengthened the U.S. dollar, which continues to remain the most favored currency despite all the tall talks about other currencies, especially the Euro, trying to replace the greenback in the world market, particularly in oil sector.