Rupee rout: on the Indian currency’s slide
India’s macroeconomic threats(ख़तरा/आशंका) lie exposed as it grapples with the rupee’s slide. The currency sunk to a closing low of 68.07 against the U.S. dollar on Tuesday, its lowest level in 16 months, before recovering slightly(थोड़ा/साधारणत:) the next day. The rupee, already one of the worst(निकृष्टतम/अत्यंत बुरा) performing Asian currencies, has now weakened 6.2% in 2018. The rise in crude oil prices through this year, amidst rising geopolitical(भूगर्भीय) tensions in West Asia and dwindling(क्षीण होना/महत्त्व खोना) global supply, have obviously hurt the rupee and the trade balance. Meanwhile, despite(के बावजूद) a depreciating currency(कमजोर मुद्रा ), India’s merchandise exports are stumbling(लड़खड़ाना/ठोकर खाना) instead of gaining from the opportunity. April clocked a sharp decline in exports from employment-intensive(रोजगार प्रधान) sectors such as readymade garments and gems and jewellery, according to official data. The trade deficit(अभाव/नुकसान) has consequently(फलस्वरूप/परिणामतः) widened to $13.7 billion in April, compared to $13.25 billion in the same month in 2017. The value of oil and petroleum product imports increased by 41.5% from last year to hit $10.4 billion. U.S. sanctions following Washington’s withdrawal from the Iran nuclear deal and a June 22 meeting of OPEC should drive oil price trends hereon. Oil prices apart, the tightening of U.S. monetary(मुद्रा) policy has almost always spelled trouble(मुसीबत) for emerging market economies hooked to Western capital inflows. This time it is no different; capital outflows are scuppering(टूटना/छेड़छाड़ करना )the currencies of many emerging market economies.
As the U.S. Federal Reserve has come to adopt a more hawkish stance, investors in search of higher risk-adjusted yields(पैदावार/उपज) have started to pull money out of emerging(उभरना/निकलना) markets. Yields on emerging market bonds have risen as investors sold them off aggressively(उग्रता के साथ।). The yield on the 10-year bond issued by the Indian government has risen to more than 7.8%, from 7.1% in early April. Foreign portfolio investors (FPIs) pulled out ₹15,500 crore from India’s capital markets in April, which is the highest monthly outflow since December 2016. Not surprisingly(हैरानी की बात है,/चकित करते हुए), about two-thirds of the outflow was attributed(जिम्मेदार ठहराया/आरोपित करना) to the bond market. The current headwinds from the reversal of capital flows were only to be expected. India is better placed than countries such as Argentina or Turkey. But that’s no reason to be complacent(आत्मसंतुष्ट/प्रसन्न) as external account risks can get out of hand very quickly. A hike in the RBI’s benchmark interest rates could stem the capital exodus(पूंजीगत पलायन ), but with core inflation picking up and the government keen on a rate cut as a growth catalyst, the RBI has an unenviable dilemma(दुविधा) on its hands. Policymakers, blessed with relatively(अपेक्षाकृत) benign external economic conditions after the taper tantrum of 2013, will have to find means to spur exports — whether by facilitating swifter GST refunds or taking on tariff and non-tariffbarriers(बाधाएं) from the developed world. Efforts to diversify India’s energy basket also need greater stress.
Important Vocabulary
1.dwindling(क्षीण होना/महत्त्व खोना)
Synonyms: abate, decay, decline, decrease, die down
Antonyms: ascend, develop, enhance, enlarge, expand
2.Worst(निकृष्टतम/अत्यंत बुरा)
Synonyms: lowest, bad, inferior, least, unfavorable
Antonyms: best
3.consequently(फलस्वरूप/परिणामतः)
Synonyms: therefore, ergo, thereupon, wherefore
4.Attributed(जिम्मेदार ठहराया)
Synonyms: apply, associate, blame, connect, credit
Antonyms: disconnect
5.Dilemma(दुविधा)
Synonyms: difficulty, embarrassment, impasse, mess, plight
Antonyms: good fortune, solution, advantage, benefit, boon
