Replacing the dollar necessitates not only a rival currency but also an equally robust financial market, trusted institutions, and an ecosystem of banks, investors & payment infrastructure.
The other emerging market currencies experienced a more pronounced depreciation against the dollar than the rupee in 2024, resulting in a relative appreciation effect.
A big source of uncertainty will be trade after Trump assumes office. However, within India, rural demand is likely to sustain momentum & inflation is less likely to be a big problem.
Trump's threat to impose 100% tariff on BRICS nations won't worry Indian policymakers, given that it has consistently denied any interest in replacement of US dollar as global currency.
Investors are pricing in lower taxes and new trade tariffs under the Trump administration, measures seen as inflationary which could prompt Fed to curb easing of interest rates.
Central banks can intervene in forex market to influence exchange rate. Analysis by ThePrint shows RBI has been doing this for months, but last week saw rupee fall sharply nevertheless.
In Episode 1544 of CutTheClutter, Editor-in-Chief Shekhar Gupta looks at some top economists pointing to the pitfalls of ‘currency nationalism’ with data from 1991 to 2004.
Mizoram chief minister Lalduhoma has flagged an unusual rise in foreign arrivals. Nearly 2,000 Western visitors entered Mizoram between June and December 2024.
It’s easy to understand why the government can’t speak the hard truth. When this war ends, as all wars do, India’s interests will lie with both the winner and the loser.
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