![]() ![]() This led to a higher interest rate differential between the US and India, and investors pulled out money from the domestic market and started investing in the US market to take advantage of higher rates. The US Fed aggressively raised interest rates by 425 basis point (bps) in 2022 in its fight against inflation.What was the Reason for Capital Outflows? Reserves have witnessed a bit of erosion but the central bank is now starting to again build up its reserves and that would act as a buffer in times of uncertainty. ![]() It stood at USD 562.81 billion as of 23 rd December 2022. Since the beginning of 2022, the country’s foreign exchange reserves have fallen by USD 70 billion. However, the Reserve Bank of India (RBI) heavily intervened in the forex market to defend rupee.South Korean Won and Malaysian Ringgit declined by nearly 7% and 6%, respectively. During the year, the Chinese Yuan, Philippine Peso and Indonesian Rupiah fell around 9%.Compared to rupee, depreciation of other Asian currencies was to a lesser extent. During the year, the rupee fell to a lifetime low of 83.2 against the dollar.This decline was mainly on account of appreciation in the US currency on safe haven appeal amid fears of recessionand inflation across many parts of the world and Russia-Ukraine war.The Indian Rupee depreciated by around 10% against the US dollar and the rupee was the worst-performing Asian currency in 2022. For Prelims: Depreciation of Indian Rupee, Currency depreciation, inflation, Depreciation Vs Devaluation, Appreciation Vs Depreciationįor Mains: Impact of Depreciation of Indian Rupee on economy Why in News? ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |