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Rupee depreciation
News:
- The Indian rupee recently fell below 68.07 against the U.S. dollar, lowest level in 16 months.
Important facts:
2. The rupee has weakened 6.2% in 2018. This is due to:
- Rise in crude oil prices,
- rising geopolitical tensions in West Asia, and
- Decreasing global supply.
3. India’s merchandise exports are in a poor position. As for example:
- April, 2018 had a decline in exports from employment-intensive sectors.
- The value of oil and petroleum product imports increased by 41.5% from last year.
- Investors in search of higher risk-adjusted yields have started to pull money out of emerging markets.
- Yields on emerging market bonds have risen as investors sold them off aggressively.
4. Measures to increase exports:
- Facilitate swifter GST refunds and
- Taking on tariff and non-tariff barriers from the developed world.
5. Efforts to diversify India’s energy sector also needs to be stressed.
