Hello Ron,

Thanks again for yet another very knowledgable blog. I agree with you and Indian Rupee breached 68 mark against dollar today. I have two questions-
1. can you elaborate little more when you said " For these countries to correct their deficits, their currencies must fall materially."
2. can you also explain little more the how fed's tapering of monetary policy would impact the emerging market's currency depreciation.

I did not know the earlier currency crisis but now I can understand what happened and why. I would also like to mention some other factors which are prevalent today not sure about of earlier scenario.

Do you feel that inflation is also playing big role now ? After the financial crisis of 2007-08, US has not seen any inflation compare to what Indian economy has been seeing. So its currency should depreciate in same ratio, I would say. Also, some government policies like Indian lower house just passed food security bill and this bill would increase the fiscal deficit by another 0.25% of GDP.