[Global Times-Global Network Reporter Ni Hao] India has been boasting of its rapid economic growth into a currency crisis, especially in the past two months, the rupee has been very weak. But this situation did not change in the coming October, October 1, a wave of diving has pushed the Ruby into a new historical low. In October 4th, the rupee hit the lowest 73.918 against the US dollar. After that, although it has rebounded, it is still at a low of 73.6.
By rough calculations, the Indian rupee has fallen more than 15% since the start of the year, continuing to rank as Asia's worst performing currency. The Indonesian shield is close behind, and the drop is more than 13%.
India is the third largest economy after China and Japan in Asia, and ranks sixth in the world after the United States, China, Japan, Germany and Britain.
In the second quarter of 2018, India's GDP growth rate soared to 8.2%. The World Bank and the International Monetary Fund are optimistic about India's economic prospects, but the "uncompromising" rupee is in the turbulent financial situation, all the way down, and broke through the bottom line set by the market: 70. The haze of Rupee began to envelop the fastest growing country in the world economy.
The main reasons for the poor performance of the rupee are the rising international oil prices, the widening trade deficit, capital outflow and the government's lack of willingness to rescue the market. In addition, as the world's sixth largest economy, India's foreign exchange reserves are only $400 billion.
The rise in international crude oil prices is considered to be the main reason for the fall of the rupee. At present, oil is India's largest import commodity, and 80% of India's oil demand depends on imports. Increasing oil demand will cost India more dollars, further widen its trade deficit and further depress the rupee.
In order to save the rupee, the government of India has made many moves. On September 26, the Indian government suddenly announced a tariff increase on 19 "unnecessary commodities" to reduce the widening current account deficit. Including adjustments to raise tariffs on imports of air conditioners, refrigerators, washing machines, footwear, loudspeakers, jewellery, some plastic products, trunks and aviation turbine fuels. The most influential exporters are China and South Korea.
But even so, the rupee's exchange rate is still falling. After the new tariff deal, on October 1, the rupee began to fall again.
At present, the market is not optimistic about the future of Rupee. The Indian rupee is likely to fall further in the remaining three months of the year as oil prices are heading for a high of $100 a barrel, Bloomberg said. Bloomberg also quoted the head of research at the Australian New Zealand Bank as saying it is difficult to see a sharp rebound in the rupee, as the underlying causes of the weakness will continue to have an impact, including rising oil prices and capital outflows from rising U.S. interest rates.
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