The Slid­ing Ru­pee

India Today - - UPFRONT -

Last week, the ru­pee fell to a his­toric low against the dol­lar, buf­feted by fears of a global trade war and ris­ing oil prices. This has been a prob­lem across emerg­ing mar­kets, though the ru­pee has been the worst per­form­ing currency in Asia this year. Many com­men­ta­tors and an­a­lysts ar­gue that a fall­ing ru­pee is not nec­es­sar­ily a bad thing and that the Re­serve Bank of In­dia should not in­ter­vene. But po­lit­i­cally the gov­ern­ment is vul­ner­a­ble to op­po­si­tion at­tacks over the han­dling of the econ­omy. A pre­cip­i­tously fall­ing ru­pee is, es­sen­tially, not a good look. Eco­nomic af­fairs sec­re­tary Sub­hash Garg told re­porters that the ru­pee was cur­rently at “per­haps an outer limit or beyond the rea­son­able outer limit for de­pre­ci­a­tion”. But, he added, there was no cause for im­porters and for­eign currency bor­row­ers to panic, as he did not fore­see a fur­ther fall. Some an­a­lysts, how­ever, ar­gue that a fur­ther fall to about Rs 75 to the dol­lar is likely and that even a year from now the ru­pee’s per­for­mance will still be rel­a­tively slug­gish. `72.91

A record low for the ru­pee against the dol­lar was reached dur­ing the course of the trad­ing day on Septem­ber 12. Eco­nomic af­fairs sec­re­tary Sub­hash Garg pegs the ideal rate at Rs 68-70

$18.02 BIL­LION

In­dia’s trade deficit in July. An­a­lysts say this fig­ure pre­cip­i­tated the ru­pee’s sharp fall. In­dia’s cur­rent ac­count deficit widened to 2.5% of GDP. The IMF says a CAD of over 3% of GDP may be dif­fi­cult for global mar­kets to fi­nance

$10.2 BIL­LION

In­dia’s bill for crude oil im­ports in July. Up 76% from July 2017. In­dia im­ports 80% of its crude. It is also Iran’s sec­ond big­gest cus­tomer. US sanc­tions on Iran will likely push prices higher still

12%

Loss in the value of the ru­pee against the dol­lar over the course of this year, mak­ing it Asia’s worst-per­form­ing currency. Some an­a­lysts are pre­dict­ing a fall to Rs 75 to the dol­lar. While a Reuters poll says that in a year, the ex­change rate will still be over Rs 70

$400.1 BIL­LION

In­dia’s for­eign ex­change re­serves. Still com­fort­able, but the RBI has been sell­ing dol­lars, over $11 bil­lion in May and June, caus­ing the re­duc­tion from a forex high of $426 bil­lion in April

`88.3

The price for a litre of petrol in Mum­bai on Septem­ber 11. Diesel was at Rs 77.5. De­spite the na­tion­wide ‘bandh’ the pre­vi­ous day. A price rise of 5% and 7% re­spec­tively since Au­gust 1

`2,29,019 CRORE

Tax rev­enue for the Cen­tre from petro goods in 2017-18, com­pared with Rs 99,184 crore in 2014-15

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