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Maharashtra's financial managers may well expect the dollar to continue its decline against the rupee. However, if they're using the standard macro models, downside dollar volatility also implies potential upside volatility -- and they would have the example of the 1997-98 Asian crisis to look back on.
Given that the state's income stream is totally or very largely in rupees, it makes all the sense in the world for them to want to borrow in rupees.
The real story is that they are now able to do so, which implies that India's central bank now has as much or more economic credibility than the Federal Reserve.
