Art & Culture
- Sexual Harassment Charges against Chief Justice of India Ranjan Gogoi
- All You Need to know about Electoral Bonds
- Electoral Bonds controversy
- NaMo TV controversy
- General Elections 2019
- RBI Governor bats for a Permanent Status to Finance Commission
- PM Modi’s Mission Shakti Speech & Model Code of Conduct
- Sadhvi Pragya Thakur’s latest Controversy
- Rafale deal document controversy
- Should SC Judges be under RTI ambit?
- Supreme Court Judgement on Tainted Candidates
- VVPAT verification
Governance & Social Justice
- Candida Auris : Drug- resistant fungi
- Candida auris infection
- Healthcare System for India, Difference in USA & European healthcare model?
- Lateral Entry in Civil Services explained
- Model policy for Women in Police
- NIRF India Rankings 2019 declared
- Quality Assurance Scheme
- Sex on false promise of marriage is rape
- Survey 2019 Ambitions Beyond Growth report by UNESCAP
- World Health Statistics Overview 2019 report on Life Expectancy
- World Press Freedom Index 2019
- Supreme Court compensation order on Bilkis Bano case
- WHO guidelines on physical activity for children under 5 years of age
- Global Talent Competitive Index 2019
- Algeria Political Crisis
- EU’s new Copyright Law, Will it change Web Worldwide?
- India Pakistan Kartarpur Corridor Talks
- India to Become NATO Ally?
- Japan Starts a New Era
- Julian Assange Arrested
- Sudan Political Crisis
- Trump designates Islamic Revolutionary Guard Corps of Iran
- United Nations Has to Pay India $38 Million
- US labels Revolutionary Guard of Iran a terror organisation
- US Mexico border wall controversy
- Why is UAE Important for India?
- Why is Chile Important for India?
- India Pakistan Conflict De-escalation Mechanisms
- India suspends cross LoC trade with Pakistan
- What is Arab Spring 2.0?
- India to stop buying Oil from Iran
- Trump withdraws from UN arms treaty
- Asian Development Outlook 2019
- China’s growth after slowdown
- Foreign Investment in India
- India’s 20th Livestock Census
- India’s transition to Renewable Energy from conventional sources
- Indian Army Builds The Longest Bridge of India Over Indus In Leh
- India Energy Modelling Forum by NITI Aayog & USAID
- National Common Mobility Card launched
- Rise and fall of Private Airlines in India
- Rise in Global Crude Oil prices & weakening Rupee
- Slowdown in Industrial Growth & rising Inflation
- Supreme Court order on EPFO
- Supreme Court quashes RBI’s 12 February Circular on NPA
- What are Junk Bonds?
- What is Fixed Maturity Plans?
- What is GDP deflator? Is it more comprehensive compared to WPI and CPI?
- What is Trader’s Credit Card Scheme?
- What is Wholesale Price Index?
- 1st Bimonthly Monetary Policy review – April 2019
- National Rubber Policy 2019
- Sensex hits 7 months high, History & Functions of Bombay Stock Exchange
- Supreme Court orders RBI on RTI
- What is Dedollarisation?
- Asian Tea Alliance
- Pepsico vs Farmers Issue
Defence & Security
Science & Technology
- Dhanush Artillery Guns
- Combat Casualty Drugs
- The Indian Museum of the Earth (TIME)
- EMISAT Satellite Launched
- Faster Adoption & Manufacturing of Hybrid & Electric
- First Ever Image of a Black Hole
- India to Buy MH60 Romeo Helicopters
- Nepal and Sri Lanka Launch Their First Satellites Raavana 1 & NepaliSat-1
- Nirbhay Missile Successfully Tested
- High Bacteriophages in Ganga River
- Army invokes Emergency Powers for Missile Deal
- Cell Based Meat
- INS Imphal Guided Missile Destroyer
- Draft Indian Forest Act 2019
- Gujarat Fishermen’s victory in US Supreme Court
- Humpback Mahseer Fish included in Critically Endangered list by IUCN
- India Cooling Action Plan (ICAP)
- Jammu & Kashmir Environment Issues
- Madras High Court order on Chennai Salem Highway
- Monkey declared Vermin in Himachal Pradesh
- Neelakurinji Flower under Severe Threat
- Solar eWaste
- Special Postal Stamp on Ice Stupas released
- State of Global Climate report 2018
- What is Green Finance Ecosystem?
- Wind turbines are impacting ecology in Western Ghats
- All about Wild Food Plants
Spice of the Month
- GS 3 || Economy || External Sector || Balance of Payments
Why in news?
- Rupee strengthened significantly in March 2019, on account of strong inflow of funds by foreign portfolio investors, and fell 30 paise lower to trade at around 69.5 against the dollar.
- It has lost nearly Rs 1.1 against the dollar from a level of 68.45 on April 3, 2019, to trade at around 69.5. The fall in rupee has been in line with a jump in global crude oil prices.
- The Brent crude was trading at $70.7 per barrel, its highest level in the last five months.
- Experts feel that if crude oil continues to rise, the rupee may come under further pressure as it will lead to a rise in the overall import cost.
Brent crude price
- With concerns growing over supply from OPEC and US sanctions on Venezuela, Brent crude oil prices have risen from a level of $66 per barrel on March 28 to $70.7.
- Increase in prices: If the Brent crude oil prices continue to rise, it may put additional pressure on the rupee.
- However, expectations of weakening global growth may limit its rise.
- Besides, a continued rise in inflow of FPI money will provide some support to the rupee.
- Crude traditionally has been a big determinant of rupee movement.
- In October 2018, the rupee had fallen to its all-time low of 74.34 against the dollar in line with the rising crude oil prices.
- Brent crude had hit a level of $86 per barrel in October, putting pressure on the rupee and India’s current account deficit.
- However, as the crude oil prices declined over the following months to levels of around $52 per barrel by the end of December 2018, it offered a much-needed relief to the rupee and the economy.
- Current Account Deficit (CAD): As the rupee is under pressure and oil prices are inching up, it will impact the current account.
- While the present depreciation is mainly due to external factors with the dollar strengthening against all emerging market currencies, the rising trade deficit is adding to the worry about the currency.
- The rupee is the worst performing currency among the emerging market economies in Asia.
- Rupee depreciated over 9% against the dollar in the current financial year.
- The central bank is also not seen intervening aggressively, according to currency dealers.
- The foreign exchange reserves, also seen as an important factor for currency stability, have depleted by $26 billion since April, due to sporadic interventions by the central bank to control the pace of fall in the currency.
- Depreciating rupee: A weak rupee against the dollar makes imports costlier.
- Inelastic imports: Some imports cannot be cut down such as oil, which can negatively affect India’s current account deficit.
- Trade war: Contrary to common trends that exports may rise with depreciating currency, the country’s exports may not rise this time due to ongoing trade war between major economies across the globe.
- Inflationary risk: Imports are costlier when the currency depreciates. Costlier oil means costlier vegetables and groceries since transportation costs go up.
- Weak rupee also makes education and holidays in foreign countries more expensive. Imported goods like computers, smartphones and cars also get more expensive.
- Industry borrowing: The external borrowing costs for Indian firms will only move up in the coming months due to rupee weakening.
- This may dampen industry borrowing and slower economic growth at a time when Indian banks are cautious towards lending.
- As India depends on imported crude oil, global trends have a big impact. Examine the impact of crude oil price swings on the Indian economy.