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Sinking rupee emerging (उभरते/प्रकट होना) market currencies under strain (तनाव/मांग/ज़ोरदार प्रयास), the RBI needs to have a plan.
The rupee’s troubles (मुसीबतों/आफ़त) 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 (सबसे खराब प्रदर्शन) currency in Asia this year. It is, however, not the only currency to be in the doldrums (उदासी/विषाद). Emerging market currencies as a group have witnessed (देखा) a sharp correction in their value against the dollar this year. The MSCI Emerging Markets currency index, for instance (उदाहरण/घटना), 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 (क्षय/अस्वीकार करना) as importers (आयातकों/विदेश का माल देश से लानेवाला) have had to shell (आवरण/ढांचा/छीलना) out more dollars to fund their purchases. India’s current account deficit (घाटा/कमी/नुकसान),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 (बड़ा करना/विस्तृत बनाना) to 2.5% in FY 2019. This could spell (अवधि/समय/दौर) even more trouble for the rupee as the demand for dollars could turn out to be overwhelming (भारी/जो रोक न सके). The dollar index, which gauges (अनुमान/विस्तार) 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 (बीच में/मध्य में) the ongoing trade war could be another factor behind the rout (घोर पराजय/कोलाहल) in emerging market currencies, but its impact (प्रभाव/असर) 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 (मौद्रिक नीति).
Investors attracted by higher yields (पैदावार/फल देना/मान लेना) in the United States have been pulling their capital out of India at an increasing pace over the last few months. Foreign portfolio (संविभाग)investors, in fact, took out ₹29,714 crore in May, almost a doubling of outflow (निकल भागना/बहना)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 (अशांति/हंगामा) 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 (अंत में/फलतः) 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 (घटना) tantrum (गुस्से का आवेश) of 2013.
1. emerging (उभरते/प्रकट होना)
2. strain (तनाव/मांग/ज़ोरदार प्रयास)
3. doldrums (उदासी/विषाद)
4. deficit (घाटा/कमी/नुकसान)
5. rout (घोर पराजय/कोलाहल)
6. gauges (अनुमान/विस्तार)
7. yields (पैदावार/फल देना/मान लेना)
8. turbulence (अशांति/हंगामा)
9. taper (घटना)
10. tantrum (गुस्से का आवेश)
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