Topic Of Day:-“Sinking Rupee“
The rupee’s troubles just do not seem to end. On Thursday, the currency weakened past 69 intraday against the U.S. dollar, an all-time low. The rupee, which has lost almost 8% in value since January 1, is the worst-performing currency in Asia this year. It is, however, not the only currency to be in the doldrums. Emerging market currencies as a group have witnessed a sharp correction in their value against the dollar this year. The MSCI Emerging Markets currency index, for instance, is down about 6% since the beginning of April. The rise in international crude oil prices is one of the reasons behind the rupee’s decline as importers have had to shell out more dollars to fund their purchases. India’s current account deficit, which jumped to 1.9% of GDP in the fourth quarter of 2017-18 from just 0.6% a year earlier, is now expected to widen to 2.5% in FY 2019. This could spell even more trouble for the rupee as the demand for dollars could turn out to be overwhelming. The dollar index, which gauges the value of the dollar against a host of major global currencies, is up about 7.5% since February. The rise in global trade tensions amidst the ongoing trade war could be another factor behind the rout in emerging market currencies, but its impact on the rupee remains unclear as of now. But by far the most important reason behind the fall in the rupee and other emerging market currencies is the tightening of U.S. monetary policy. Investors attracted by higher yields in the United States have been pulling their capital out of India at an increasing pace over the last few months. Foreign portfolio investors, in fact, took out ₹29,714 crore in May, almost a doubling of outflow compared to ₹15,561 crore in April. Most of the foreign fund outflow this year has come out of the bond market, which explains the steep fall in Indian bond prices. None of this turbulence in emerging markets, however, is surprising. The tightening of monetary policy by the U.S. Federal Reserve has traditionally caused the turning of the global credit cycle, which eventually leads to various crises around the world. It is hard to determine if the worst is over yet for emerging market currencies. But the fact that the American central bank expects to raise interest rates further this year suggests that more pain could be in store. The government, as well as the Reserve Bank of India, which recently raised domestic interest rates in response to rising external economic risks, may need to think out of the box to avoid a crisis similar to the taper tantrum of 2013.
MEANINGS AND WORDS
1) Intraday
Meaning: Occurring within one day.
Example: “The dollar slipped from an intraday high of 104”
2) Doldrums
Meaning: A state or period of stagnation or depression.
Example: “The mortgage market has been in the doldrums for three years”
Synonyms: Depression, Melancholy.
3) Deficit
Meaning: The amount by which something, especially a sum of money, is too small.
Example: “An annual operating deficit”
Synonyms: Shortfall, Deficiency.
4) Gauges
Meaning: Estimate or determine the amount, level, or volume of.
Example: “Astronomers can gauge the star’s intrinsic brightness”
Synonyms: Measure, Calculate.
5) Amidst
Meaning: Surrounded by; in the middle of.
Example: “Our dream home set amid magnificent rolling countryside”
Synonyms: In the middle of, Surrounded by.
6) Tightening
Meaning: Make or become tight or tighter.
Example: “He tightened up the clips”
Synonyms: Secure, Make fast.
7) Pulling
Meaning: Exert force on (someone or something) so as to cause movement towards oneself.
Example: “He pulled her down on to the couch”
Synonyms: Tug, Haul.
8) Pace
Meaning: Move or develop (something) at a particular rate or speed.
Example: “The action is paced to the beat of a perky march”
9) Turbulence
Meaning: A state of conflict or confusion.
Example: “Political turbulence”
Synonyms: Turmoil, Instability.
10) Out of the box
Meaning: Unusually good.
Example: “The novel is nothing out of the box”
11) Taper tantrum
Meaning: Taper tantrum is the term used for the 2013 surge in U.S. Treasury yields, which resulted from the Federal Reserve’s use of tapering to gradually reduce the amount of money it was feeding into the economy.
12) Accelerating
Meaning: Increase in rate, amount, or extent.
Example: “Inflation started to accelerate”
Synonyms: Speed up, Hurry up.
13) Savage
Meaning: (Of something bad or negative) very great; severe.
Example: “The decision was a savage blow for the town”
Synonyms: Severe, Crushing.
14) Swathe
Meaning: A broad strip or area of something.
Example: “Vast swathes of countryside”
15) Swept
Meaning: Move or push (someone or something) with great force.
Example: “I was swept along by the crowd”
Synonyms: Carry, Pull.
16) Reverberate
Meaning: Have continuing and serious effects.
Example: “The statements by the professor reverberated through the Capitol”
17) Ethos
Meaning: The characteristic spirit of a culture, era, or community as manifested in its attitudes and aspirations.
Example: “A challenge to the ethos of the 1960s”
Synonyms: Spirit, Character.
18) Unfettered
Meaning: Not confined or restricted.
Example: “His imagination is unfettered by the laws of logic”
Synonyms: Unrestrained, Unrestricted.
19) Rein
Meaning: Power and control of a business or other activity:
Example: “These are the councillors who hold the reins of power”
20) Unconscionable
Meaning: Not right or reasonable.
Example: “The unconscionable conduct of his son”
Synonyms: Unethical, Amoral.
21) Vigorously
Meaning: In a way that involves physical strength, effort, or energy; strenuously.
Example: “She shook her head vigorously”
Synonyms: Strenuously, With great vigour.
22) Energised
Meaning: Give vitality and enthusiasm to.
Example: “People were energized by his ideas”
Synonyms: Enliven, Liven up.
23) Progressions
Meaning: The process of developing or moving gradually towards a more advanced state.
Example: “Good opportunities for career progression”
Synonyms: Development, Progress.
24) Abolition
Meaning: The action of abolishing a system, practice, or institution.
Example: “The abolition of the death penalty”
Synonyms: Scrapping, Ending.
25) Immigration
Meaning: The action of coming to live permanently in a foreign country.
Example: “A barrier to control illegal immigration from Mexico”
26) Detention
Meaning: The action of detaining someone or the state of being detained in official custody.
Example: “The fifteen people arrested were still in police detention”
Synonyms: Custody, Imprisonment.
27) Embodiment
Meaning: A tangible or visible form of an idea, quality, or feeling.
Example: “She seemed to be a living embodiment of vitality”
Synonyms: Personification, Incarnation.
28) Strands
Meaning: An element that forms part of a complex whole.
Example: “The journal has carried articles representing many different strands of opinion on the left”
Synonyms: Element, Component.
29) Tremendously
Meaning: To a very great extent.
Example: “Costs vary tremendously from area to area”
30) Endorsement
Meaning: The action of endorsing someone or something.
Example: “The issue of full independence received overwhelming endorsement”
Synonyms: Support, Backing.
