The ‘Rajan-effect’ on India’s rupee may not last long

.....The “Rajan effect” is not lost on markets. The rupee rallied 2.2% from Friday to 63.84 per dollar yesterday. The currency, which fell to a record 68.845 on August 28, climbed 6% in the past four days, the most since at least 1973, according to Bloomberg data. Stock markets seem very optimistic too. The benchmark Sensex index rallied over 1,700 points in 4 days, 727 yesterday alone, to cross the 20,000 mark. Time to think the former International Monetary Fund chief economist is the miracle man to drive India’s ailing economy out of its worst financial crisis since 1991? Have a closer look at the deeper issues. ..........

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