THE HINDU TODAY EDITORIALS 15 AUGUST-2018 WITH VOCAB
Currency crossfire: On the weakening rupee
The weakening rupee is an opportunity to boost exports
For the Indian rupee, already grappling(मल्ल युद्ध) with high crude oil prices and the growing heft(महत्त्व) of the U.S. dollar, the latest shock has come from a most unexpected quarter. The currency, which was valued at 63.84 to the dollar at the end of 2017, briefly crossed the 70-mark in early trading on Tuesday, on account of the fall in the Turkish lira. The lira has slipped 40% against the U.S. dollar this year, but a bulk of that decline took place over just two days (16% last Friday and another 6.7% on Monday). There are many factors at play for Turkey’s currency crisis(संकट), including its standoff with the U.S. The Trump administration has just sanctioned Turkey’s Justice and Interior Ministers and plans to double punitive(दंडात्मक) tariffs(मूल्य) on steel and aluminium imports from the NATO member-country. Relations between the U.S. and Turkey are tense, with Washington refusing to hand over an Islamic cleric charged by the Recep Tayyip Erdoğan government of masterminding the failed military coup(आकस्मिक शासन परितर्तन) in 2016. A few days ago, a potential bilateral (द्विपक्षीय) deal to end Turkey’s continued detention of an American pastor ((पादरी/पुरोहित)and the incarceration(जेल में बन्द करना) by the U.S. of a Turkish banker collapsed. Beyond the bilateral consequences, the crash of the lira has had a ripple(लहर जैसी वस्तु) effect on most emerging(उभर कर आना) market currencies, catching policy-makers off guard. The South African rand, for instance, on Monday had its biggest single-day fall in a decade.
In contrast (परस्पर तुलना करना/ फर्क दिखाना), the rupee’s fall from about ₹68.5 to ₹70 appears minor. The stock markets, which tumbled (गिराव) on Monday as the currency weakened, seemed to take the rupee’s slide in their stride(लंबे कदम)on Tuesday, with the Sensex rising by half a percentage point. There is in fact no need to panic on account of the rupee. Barring the gradual decline in its value this year, the Indian currency has been fairly stable over 2016 and 2017; with inflation being higher than in developed countries, its purchasing power at home has been falling. As former Chief Economic Adviser Kaushik Basu said last week, the rupee’s correct value may be closer to 70-71 to the dollar, and achieving that level will boost job-creating sectors like exports that have severely underperformed in recent years. In addition, with foreign exchange reserves currently around $400 billion, India is comfortably placed. With both consumer and wholesale price inflation easing in July, the Reserve Bank of India, which has only intervened(हस्तक्षेप करना) sparingly(किफ़ायत से) in the forex market so far, may have room to hold off on a growth-debilitating(कमजोर करना) rate hike in October. The global flight to safety towards the Japanese yen and the U.S. dollar and the prospect of higher oil prices remain risks. But India is better-placed than most other emerging economies to use this tumult (तुफान/खलबल) as an opportunity, instead of seeing it as a calamity(विपत्ति)