TOPIC OF THE DAY:-“The U.S. Honeypot”
Finance Minister Arun Jaitley has rightly observed that external factors are the cause. In particular, global capital and perhaps currency speculators have been flocking to the American economy. This is not really surprising because the U.S. economy has become a very attractive option. Some months ago, U.S. President Donald Trump announced a massive decrease in corporate tax rates. More recently, the U.S. Federal Reserve has also increased interest rates. The icing on the global investors’ cake is the booming U.S. economy.
Not surprisingly, the dollar has appreciated sharply against practically all other currencies too. For instance, it has moved up against both the euro and the pound. Developing economies are typically even harder hit since global portfolio investors tend to withdraw from these markets, perhaps because their economic or political fundamentals are relatively more unstable. Countries such as Turkey and South Africa have experienced significantly higher rates of devaluation than India.
A long time ago, the ‘standard’ or textbook prescription for countries with severe balance of payments deficits was to devalue their currencies. The underlying rationale was that devaluation decreases the price of exports in foreign countries and so provides a boost to exports by making them more competitive. Correspondingly, imports become more expensive in the domestic economy, in turn reducing the volume of imports. Unfortunately, this seemingly plausible reasoning does not always work. For instance, if several countries are devaluing at the same time — as it seems to be happening now — then none of these countries benefit from their exports being cheaper abroad. In other words, there may not be any surge in Indian exports following the current round of devaluation. Neither will there be a huge fall in imports. Crude oil is by far the biggest item in the list of Indian imports, and this is price-inelastic. Imports from China now constitute a tenth of overall imports. Since the yuan has also depreciated against the dollar, there is not much reason to believe that Chinese imports will be costlier than earlier.
MEANINGS AND WORDS
1) travails
Meaning : engage in painful or laborious effort.
Tamil Meaning : துயரங்கள்
Synonyms : agony
Antonyms : comfort
Example : “creation may travail in pain but it cannot escape its destiny”
2) precipitously
Meaning : very steeply.
Tamil Meaning : திடீர்
Synonyms : abrupt
Antonyms : calm
Example : “off the coast, the depth of the sea floor drops precipitously”
3) hovering
Meaning : remain in one place in the air.
Tamil Meaning : மிதவை
Synonyms : flicker , flutter
Antonyms : rest
Example : “Army helicopters hovered overhead”
4) speculators
Meaning : a person who invests in stocks, property, or other ventures in the hope of making a profit.
Tamil Meaning : உளவு
Synonyms : explorer , gambler
Antonyms : assumer
Example : “financial speculators exploiting small changes in markets to make money”
5) flocking
Meaning : a number of birds of one kind feeding, resting, or travelling together.
Tamil Meaning : மந்தை
Synonyms : colony , throng
Antonyms : separate
Example : “a flock of gulls”
6) booming
Meaning : a loud, deep, resonant sound.
Synonyms : explosion
Antonyms : collapse
Example : “the deep boom of the bass drum”
7) portfolio
Meaning : a large, thin, flat case for loose sheets of paper such as drawings or maps.
Synonyms : case
Antonyms : disorder
Example : “under his arm he carried a large portfolio of drawings”
8) rationale
Meaning : a set of reasons or a logical basis for a course of action or belief.
Tamil Meaning : காரணம்
Synonyms : hypothesis , motivation
Antonyms : proof
Example : “he explained the rationale behind the change”
9) plausible
Meaning : (of an argument or statement) seeming reasonable or probable.
Tamil Meaning : நம்பத்தகுந்த
Synonyms : logical , credible
Antonyms : impossible
Example : “a plausible explanation”
10) fluctuation
Meaning : an irregular rising and falling in number or amount; a variation.
Tamil Meaning : ஏற்ற இறக்கமான
Synonyms : variation
Antonyms : stability
Example : “fluctuations in the yearly values could be caused by a variety of factors”
11) depreciated
Meaning : diminish in value over a period of time.
Tamil Meaning : தணி
Synonyms : depress , diminish
Antonyms : compliment
Example : “the latest cars will depreciate heavily in the first year”
12) anxiety
Meaning : a feeling of worry, nervousness, or unease about something with an uncertain outcome.
Tamil Meaning : பதட்டம்
Synonyms : disquiet , misery
Antonyms : belief
Example : “he felt a surge of anxiety”
13) surge
Meaning : a sudden powerful forward or upward movement, especially by a crowd or by a natural force such as the tide.
Tamil Meaning : எழுச்சி
Synonyms : flood , growth
Antonyms : decline
Example : “flooding caused by tidal surges”
14) steep
Meaning : (of a slope, flight of stairs, or angle) rising or falling sharply; almost perpendicular.
Tamil Meaning : செங்குத்தான
Synonyms : abrupt , sharp
Antonyms : gradual
Example : “she pushed the bike up the steep hill”
15) fiscal
Meaning : relating to government revenue, especially taxes.
Tamil Meaning : நிதி
Synonyms : budgetary
Antonyms : exempt
Example : “monetary and fiscal policy”
