Rupee and oil economy

By Nagaland Post | Publish Date: 9/7/2018 12:01:13 PM IST

 It’s a puzzle for an economy that is growing at 7 plus percentage. On the flip side, the currency is slumping by 13 percent and perhaps more. The Indian rupee crashed to yet another historic low , touching Rs.72 to the Dollar and rattling not only individuals but also business, traders, transporters etc. The bearish bets in Southeast Asia and other markets that the Indian rupee will lose further and hit fresh lows. Rising oil prices and a weakening rupee mean that India’s current account deficit may widen to 2.8% of the GDP this financial year, up from 1.9% last year, according to a report by Nomura Research. This year, the deficit has already jumped to a nearly five-year high of $18 billion. This only adds further pressure on the rupee. The solace is that rupee is not alone in its downward journey as many others may join it. However, the pace with which the rupee is falling, is worrying. The dollar is gaining about 3 percent against many currencies. Turkey, South Africa and Argentina are hit by recession. But currencies of many tiny nations like Coatia are not facing that kind of upheaval. The Indian currency tumbles even as India it signs the 2+2 talks. India wants to import more US technology and prioritise it over Russia. India still is not out of danger of facing US sanctions on Russian arms purchases and Iran deals on oil. So cosying with the US is not actually beneficial. More India cosies with the US, more apparently the US uses tactics to corner it. The country needs to understand whether the currency market is also being spooked by someone or not. The US is playing a diplomatic and market game to suppress fast paced economies. It creates a new monopoly market for it. The oppressive methods help the US many ways including strengthening the dollar and making US imports cheaper and sales dearer. Both ways the US gains. Countries like India have problems in countering a mighty US, which has the capacity to wreck smaller economies. The politics of sanctions has cost it dearly. The sanctions against Russia can hit India hard as the US, through military-diplomacy could isolate it. However sanction cannot hit the happiness of many EU states, who want a straight deal with their neighbour, Russia. They are also facing US threats and are in dilemma. So will this global policing continue? For the present it seems so. Russia still tries to flaunt itself is not as strong as Soviet Union was. Even China has tactically retraced a few steps. Others do not matter to the US. So the hegemony continues. India as yet has to look for new diplomatic and market strategies. As long as it would be dependent on the US and not Iran for oil imports, arms and strategic systems and try to please the US administration, it has little to counter the US moves. While its overt diplomacy with the US should continue, India has to evolve an effective system to create the necessary self-sufficiency. American arm-twisting is not going to end soon. It is respectful only to a strong state. India is definitely not one of it. So rupee can fall further. And falling oil prices cause mayhem.

Launched on December 3,1990. Nagaland Post is the first and highest circulated newspaper of Nagaland state. Nagaland Post is also the first newspaper in Nagaland to be published in multi-colour.

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