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29th June 2018 Part-3: Daily News Analysis
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Exports and rupee decline explained

Jatin Verma is teaching live on Unacademy Plus

Jatin Verma
Have appeared in UPSC CSE thrice. Have been taking Unacademy Plus courses Academics- Polity, Economics & Current Affairs.

U
Unacademy user
CVC is a statutory body
Rahul Agrawal
2 years ago
Correct
can anyone explain why there is rupee decline ?? like reason behind it ?? from 68 to 69 ??
When you see in the papers that rupee has become stronger/weaker or has gained some points or lost them, it simply means the value of rupee against dollar has increased/decreased. eg. Currently $1=68.45 rupees. If it says rupee gained/became stronger then $1=67/66/65. When it says gained, the numbers actually go down for rupee. It is so because now we have to spend less to buy a dollar so we are the gainers.
Currently rupee is declining due to rising oil prices, ongoing trade war,increase in interest rate in US.
sir Economics kaise pdhe... tell me some source from where I can clear my basics about this subject.
sir what do u think about HECI.the changes that's proposed in it can't we implement the same in UGC to make it better from present state.
sir what is current account balance and current account deficit? I am not able to understand. Please try to explain that also. thank you.
sir what is current account balance and current account deficit? I am not able to understand. Please try to explain that also. thank you.
  1. to age 13 Business News: India least vulnerable to stronger U.S. dollar at thh Moody's has suggested that India's low dependence on foreign currency borrowing, limits risks to the sovereign even if the Indian currency weakens by more than 7% against the dollar in 2018. Moody's stated that, "India's low dependence on foreign currency borrowing to fund its debt burden limits the risk of currency depreciation transmitting into materially weaker debt re affordability." The rupee hit an all-time intraday low against the dollar breaching the 69-a-dollar mark that prompted the central bank to intervene in the currency market by selling dollars through state- run banks. e ar k h ent Furthermore, Moody's suggested that, "while the current account deficit (CAD) had widened due to rising oil prices, it remained modest relative to the GDP and is largely financed by equity inflows, including foreign direct investment." Forex reserves India's significant build-up of foreign exchange reserves in recent vears to all-time highs, provides a support buffer to help mitigate external vulnerability risk," Moody's added. tis that en thec


  2. to Sovereign risk at thh Sovereign risk is the chance that a central bank will implement foreign exchange rules that wil significantly reduce or negate the worth of its forex contracts. It also includes the risk that a foreign nation will either fail to meet debt repayments or not honor p sovereign debt payments re he The current account deficit It is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the goods and services it exports. The current account includes net income, such as interest and dividends, and transfers, such as foreign aid, although these components make up only a small percentage of the total current account e ar k h ent The current account represents a country's foreign transactions and, like the capital account, is a component of a country's balance of payments. Current Account Balance: The current account is one of the two components of a country's balance of payments, the other being the capital account tis that en thec


  3. to Current Account Balance: at thh It consists of: i. The trade balance (the difference between total exports and total imports) ii. The net factor income (difference between the return on investments generated by citizens abroad and payments made to foreign investors domestically) piii. Net cash transfers, where all these elements are measured in the domestic currency he When a country's current account balance is positive (also known as incurring a surplus), the re country is a net lender to the rest of the world. > When a country's current account balance is negative (also known as running a deficit), the country s a net borrower from the rest of the world e ar k h > The ratio of the current account balance to the GDP (or % of GDP) provides an indication of the country's level of international competitiveness The Current Account Deficit: It is a measurement of a country's trade where the value of the goods and services it imports exceeds the value of the goods and services it exports. Current account includes net income, such as interest and dividends, and transfers, such as foreign aid, although these components make up only a small percentage of the total current account. The current account represents a country's foreign transactions and, like the capital account, is a component of a country's balance of payments., 8 33 tis


  4. to Page 13 Business News: RBI steps in as rupee hits record low at thh The rupee has extended its losing streak for a 4th straight session, breaching the 69-a-dollar mark for the first time ever in early trade . RBI intervened by selling dollars through state-run banks, curbing volatility in the foreign exchange market and helping the local currency trim its losses. p The RBI is said to have intervened to stop the sharp fall in the rupee against the dollar. te is estimated to have sold dollars about $700-$800 million through state-owned banks. The RBI is expected to intervene aggressively at 69.0 levels to support the rupee . Climbing crude oil prices, which would fan inflation and widen the current account deficit, fears of a looming global trade war and the rising U.S. interest rates have combined to exacerbate outflows from emerging markets and impacted the rupee. k h ent The Indian currency has depreciated more than 7% this year, making it the worst performing Asian currency in the period. Currency traders expect the rupee will remain under pressure in the near term as oil prices continue to stay high and capital outflows from the emerging markets continue . The outflow by foreign investors and the hardening of oil prices have impacted the rupee. Fairly priced: However, it is believed that the the rupee is fairly priced at the current levels. It has been holding steady for almost a year. Most of the other currencies have depreciated against the dollar and so the correction in the rupee is not completely negative as such. tis


  5. want te be starting sa to While the country's $413 billion foreign exchange reserves acts as a cushion, the pile has shrunk, as the RBI intervenes in the currency market to smooth volatility. The RBI has said that it does not target any specific level for the currency and only intervenes to curb volatility. The weak sentiment spilled onto the bonds and equity markets. . > Foreign investors have been net sellers at Rs. 40,439 crore in the debt segment till date this re he year In the equity market, overseas investors have been net sellers at Rs. 5,753 crore in 2018. Oil minister said that India could not remain insulated in a globalised economy >He said, OPEC's decision to increase production by 1 million barrels per day from July 1 will start having its impact. Strong dollar and high crude oil prices are sentimental and have market driven impact ent tis that en thec


  6. want te be starting sa to Page 13 Business News: No extra edge, only a level playing field . Federation of Indian Export Organisations (FIEO) has stated that Collapse of Indian rupee to a at thh lifetime low of 69.10 against the U.S. dollar will not give an extra edge to domestic exporters, but provide a level-playing field in global market. FIEO director general has said that the development will not provide any additional support to exporters as currencies of other emerging economies, including China, too are depreciating. e will provide a level playing field to the exporters. It will not provide the much needed support as India is not singled out. Rising exports e ar India's exports grew 20.18% to $28.86 billion in May, the highest in 6 months, even though D trade deficit widened to a four- month high of $14.62 billion The rupee had touched a lifetime low of 69.10 against the U.S. dollar by plunging 49 paise in early trade, as rising crude oil prices deepened concerns about India's current account deficit u and inflation dynamics. ent tis that


  7. to Page 13 Business News: Engineering goods exporters hit by rupee vovo at thh Engineering Export Promotion Council (EEPC) chairman said that the import intensity in engineering exports is increasing and hence the fluctuation of the rupee in a very short period, creates pricing complications for engineering goods exporters. Engineering exports, which account for more than 25% of the country's total merchandise export, stood at $76.20 bn in 2017-18 against S65.23 bn in 2016-17. re >The U.S. is among the biggest markets for Indian engineering exports. . Engineering Export Promotion Council stated that: There should be stability in rupee movements so that it is possible for exporters to price their contracts with some amount of certainty e ar k h ent Engineering exporters work on long term contracts and MSMEs do not have the wherewithal for forward contracts. Analysts believe that the increasing crude oil prices and heightening trade tensions between the u U.S. and China are the main reasons behind the rupee weakening. A major sell-off in the domestic equity and debt markets has also added downward pressure on the Indian currency Mitigating forex risk: > Meanwhile, the volatile rupee is spelling doom for the automotive and auto components . sectors too. tis that


  8. want te be starting sa Analysts further state that the Prices of products for the domestic market needs to be revised from time to time to mitigate forex risk. At the same time, the exports will fetch more money, but the exports are a small part of the overall business. A stable and stronger rupee is more important. It is believed that auto component players with significant exports, should see improvement in 8 their margins if they have not hedged their receivables and the import density is not high. he e ar k h that en thec


  9. want te be startin to Page 2 East News: Mizoram Assembly opposes Bill at thh . The Mizoram Assembly has unanimously adopted a resolution opposing the Citizenship (Amendment) Bill, 2016. The Bll, introduced in the Lok Sabha to amend the Citizenship Act, 1955, proposes to make p illegal migrants of six communities, Hindus, Sikhs, Buddhists, Jains, Parsis and Christians, eligible te for Indian citizenship after six years of residence in the country The resolution, moved by State Home Minister, impressed upon the Centre that the Bill, if enacted, would be harmful to States like Mizoram where a large number of illegal Buddhist migrants fromS Bangladesh reside >He said the Bill, seeking to make illegal immigrants eligible for Indian citizenship on the basis . e ar k h ent of religion, was against the principles of secularism and "amounted to patronage of some religions tis that


  10. to Page 7 Nation News: Rising temperature to cut living standards . As per the World Bank, 600 million Indians could see a dip in living standards by 2050, if at thh temperatures continue to rise at their current pace. As per the World Bank Report . 7 out of the 10 severest/most vulnerable 'hotspots' in India would be located in Maharashtra. reThe rest would be in Madhya Pradesh and Chhattisgarh. the absence of a major climate mitigation, nearly 148 million Indians will be living in these severe hotspots in 2050. States in the central, northern and northwestern parts of India emerge as the most vulnerable. Chhattisgarh and Madhya Pradesh, which are predicted to experience a decline in living standards of more than 9%, are the top two 'hot spot' States in India, followed by Rajasthan, Uttar Pradesh, and Maharashtra e ar un . India's average annual temperatures are expected to rise by 1 C to 2oC by 2050, even if preventive measures are taken along the lines of those recommended by the Paris climate change stay agreement of 2015 . If no measures are taken, average temperatures in India are predicted to increase by 1.5 C to 3 C tis that


  11. want te be starting sa to Page 10 News: Parliament must overturn SC ruling at thh The National Scheduled Castes Alliance (NSCA) of Punjab has urged the Central govt. to overturn the recent decision of the Supreme Court to ban automatic arrest and registration of criminal cases in complaints under the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989 . reThe alliance has also asked the Union govt to call for a special session of Parliament regarding the issue NSCA president said that a memorandum with regard to this demand has been forwarded to PM. >There is a tense atmosphere in the Scheduled Caste community at the moment. e ar k h ent People are losing their confidence in the government. >NSCA president said that the SC/ST Act, 1989, should be inducted into the 9th Schedule of ou the Constitution to prevent further dilutions of the Act. tis that


  12. to Page 11 News: Old Vs. New: How Different is the proposed Higher Education Commision from UGC? Financial and academic powers att Action on bogus institutions Disputes UGC HECI UGC can be terminated for contravention of shut down sub-standard institutions to universities for violations of its UGC: It disburses grants to Central institutions out of its Affiliations of colleges to universities funds wl be empowered to penalise oseo any dispute between foademict ucc is mandated its regulations. It can withhold grants without affecting students interests. If the Centre promote and coordinate the management of the institution does and the UGC university education and t determine and maintn regulations. It occasionally publishes not comply with the penalties, they can on policy, standards of teaching, examination and research ists of bogus institutions HECI: No power to give grants Academic: It will specify standards for grant of authorisation to a university Has a Chairman, a Vice-Chairman and the Centre prevails HECI The Centre prevails land in jail for up to three years Composition UGC HECI It shall comprise a Chairperson, a Vice-Chairperson and 12 members to ent Regular staff UGC or higher educational bo 10 members appointed by the Central government, some ex-officio membersbe appointed by the Centre, including The UGC and some from academia, industry. Chairman's retirement age is 65 years industry institution to commence its academic operations Inspection UGC educationists and a member of the appoints its own staff. . Chairman's retirement age is The present To assess financiahineis on term 5 years, two terms permitted 70, will hold office for five years staff will be re-trained to work on fully dards of teaching in an term 5 years, two terms permitted institution, UGC conducts periodic inspections HECI HECI The HECI will digital mode have its ownwithout regular staff physical files No inspections. HECI will prescribe norms on academic performance by higher educational institutions at HECI


  13. to Page 12 World News: 2+2 postponed due to scheduling issue at thh U.S. has confirmed that the abrupt postponement of the first 2+2 dialogue between India and the U.S., which was earlier scheduled to take place on July 6, has nothing to do with any disagreement between the two countries on trade, sanctions, or any other policy issues pU.S. said that U.S.-India relationship is a major priority for the administration and U.S. remains re rmly committed to the partnership with India and looks forward to the rescheduling of 2+2 as soon as possible. The postponement of the dialogue is linked to other travel plans for Secretary of State. . The U.S. Secretary conveyed to the external affairs minister, his regret at the postponement of the e ar ent 2+2 dialogue previously scheduled to take place on July 6. > He added that India's central role in U.S. national security is enshrined in the President's National Security Strategy which has noted that "India's emergence as a leading global power and stronger strategic and defence partner is welcomed." Meanwhile, the U.S. has proposed that a meeting between India's Defence Minister and U.S. Defense Secretary could take place on July 6 However, India has reservations about going down that path. New Delhi is yet to respond officially to the proposal tis that


  14. to Page 12 World News: U.K. defends use of controversial rule at thh Britain's Home Office has defended its treatment of highly skilled workers-many from India who were denied the right to settle in Britain because of changes made to their tax submissions, using a controversial anti-terror rule Britain had concluded the first stage of a review of the use of 322 (5), used to deny settlement re rts to those deemed a criminal or a security risk, following a public campaign by highly skilled* workers from across the subcontinent. Paragraph 322(5) of the Immigration Rules is one of the "general grounds for refusal". It states that applications for leave to remain should normally be refused where it would be undesirable for a e ar k h ent person to remain in the UK in light of their conduct, character or associations. * Cruel tactics: During a debate in Parliament earlier this month, MPs accused the govt of using "cruel", "inappropriate", and "heavy handed" tactics over its use of Immigration rule 322 (5) to" prevent over 1,000 highly skilled migrantsincluding doctors, lawyers, IT technicians, and engineers, many from India - from settling in the U.K., and threatening them with deportation . However, in her letter, Ms. Nokes insisted that in the cases reviewed to date, the applicants had not been refused on the grounds that they had made errors in their tax returns. She said the refusal was because the applicants had either reported "exaggerated" earnings to the Home Office or because tis they under-reported their earnings totax authorities to evade" dues. 13


  15. Thank you Jatin Verma 155k Followers Follow Ratings & Reviews Roman Saini A great course by Jatin Verma where he has literally covered all the important news from The Hindu. Must watch. Mohit Rai If i achieve my aim, my first salary will go to this great individual making this great informative and well-researched videos. I should take this opportunity to thanlk and congratulate him for the wonderful work he is doing for all the aspirants. He is meticulous and almost perfect in his approach and understanding. Please keep making such videos as a single 26k Enrollments Enroll