{"id":196965,"date":"2022-07-23T14:54:14","date_gmt":"2022-07-23T09:24:14","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=196965"},"modified":"2022-07-23T14:54:35","modified_gmt":"2022-07-23T09:24:35","slug":"despite-pressures-the-rupees-remarkable-resilience","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/despite-pressures-the-rupees-remarkable-resilience\/","title":{"rendered":"Despite pressures, the rupee\u2019s remarkable resilience"},"content":{"rendered":"\n

Source<\/strong>: This post is based on the article\u00a0\u201cDespite pressures, the rupee\u2019s remarkable resilience\u201d<\/strong> published in The Hindu <\/b>on\u00a023rd July 2022<\/strong>.<\/p>\n

Syllabus<\/strong>: GS 3 \u2013 Indian Economy and issues relating to planning, mobilization, of resources.<\/p>\n

Relevance<\/strong>: To understand the performance of the Indian Rupee to the US Dollar.<\/p>\n

News<\/strong>: <\/span>The Indian rupee has depreciated by around 7% against the U.S. dollar, since the start of the year.<\/span><\/p>\n\n\n\n
Must read: Fall in Rupee Value: Reasons, Concerns and Solutions \u2013 Explained, pointwise<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What is the position of the dollar and the US?<\/h5>\n

The dollar has strengthened against all currencies, developed or emerging. The consumer price index (CPI) inflation in the United States reached a multi-decade high of 9.1% in June 2022. This prompted the reversal in the monetary policy stance of the US Federal Reserve.<\/p>\n

The rate hiking cycle by the US Federal Reserve has caused the dollar\u2019s appreciation which has led the dollar index to strengthen by over 11% in 2022 so far, taking it to a 20-year high.<\/p>\n\n\n\n
Read more: External vulnerabilities: Time for a rupee review<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What is the situation of the Indian rupee?<\/h5>\n

India\u2019s foreign exchange reserves have moderated by almost $55 billion from a high of $635 billion.<\/p>\n

The rupee has fallen sharply against the dollar, but the depreciation has been relatively lower compared with past crises such as the global financial crisis of 2008 (the rupee had weakened by over 20% between December 2007-June 2009) and the Taper Tantrum<\/a><\/strong> of 2013 (for seven months from the start of the crisis in May 2013, the rupee had depreciated by over 11%).<\/p>\n

What is the RBI\u2019s response to the performance of the Rupee?<\/span><\/h5>\n\n\n\n
Read here: Why there is no reason to panic over the rupee<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What are the effects of a weak rupee?<\/h5>\n\n\n\n
Read here: Explained: What Rs 80 to a dollar means<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What should be done to strengthen the rupee?<\/h5>\n

Firstly<\/strong>, the Government could encourage some of the large market cap companies (private and public sectors) to be included in the major global indices such as MSCI and FTSE. This will help increase the weight of Indian equities in these indices and also compensate for foreign portfolio outflows to some extent.<\/p>\n

Secondly<\/strong>, The Government could also assist India\u2019s entry into bond indices such as J.P. Morgan\u2019s Emerging-Market Bond Index and Barclays Global Bond Index. This will a)\u00a0<\/strong> Lead to forex inflows, b)<\/strong> Have a soothing impact on interest rates, c)<\/strong> Provide the central bank with the requisite ammunition in case there is further weakness.<\/p>\n\n\n\n
Read more: Why Weaker Rupee Isn\u2019t All Bad News<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

Source: This post is based on the article\u00a0\u201cDespite pressures, the rupee\u2019s remarkable resilience\u201d published in The Hindu on\u00a023rd July 2022. Syllabus: GS 3 \u2013 Indian Economy and issues relating to planning, mobilization, of resources. Relevance: To understand the performance of the Indian Rupee to the US Dollar. News: The Indian rupee has depreciated by around… Continue reading Despite pressures, the rupee\u2019s remarkable resilience<\/span><\/a><\/p>\n","protected":false},"author":10311,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10498],"class_list":["post-196965","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704895138},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/196965","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10311"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=196965"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/196965\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=196965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=196965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=196965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}