HT Image
HT Image

The Rupee should weaken against the dollar

There has been considerable realignment of the major world currencies in the last three months, writes DH Pai Panandiker.
By DH Pai Panandiker | None
PUBLISHED ON FEB 16, 2007 05:18 PM IST

There has been considerable realignment of the major world currencies in the last three months. While the G7 finance ministers and central bankers took note of these changes last week, they singled out the Chinese yuan as the one needing greater flexibility, possibly because it remains almost firmly tied to the dollar and, as such, does not reflect the new 'fundamentals' of the Chinese economy.

The movement in other currencies is significant. The US dollar fell 6.5 per cent against the euro since October 13. The fall was mainly due to US inflation, which is currently at 2.5 per cent. Trade deficit is excessive and a slow down in the economy has begun, led by the housing sector. After 17 successive increases the Fed interest rate stands at 5.25 per cent, the highest among the developed countries.

A more glaring and sudden fall was that of the yen. With the Japanese economic recovery, the Bank of Japan had increased the rate of interest to 0.25 per cent, the highest since 2001. The investors were expecting more. They have now discovered that it is good business to borrow in Japan and invest in other countries where the interest rates are high. Huge investments have gone to New Zealand where the interest rate has peaked at 7.5 pc. This ‘carry trade’ and ‘one-way bets’ in the currency market brought about the fall of the yen.

The euro and the pound hardened against the dollar and the yen. The European Central Bank increased the rate of interest six times since December 2005 taking it to the current 3.5 per cent level. The ECB is much more sensitive to inflation than even the US Federal Reserve. Besides, the EU economy has been performing fairly well though the threat of inflation persists and the March 8 ECB meeting mostly likely further jack up the rate of interest. The UK has already hiked its rate to 5.25 per cent, brining it at par with the US rate of interest.

The G7 took note of the softening of the yen but did not comment. For one, it is because the Bank of Japan Chairman agreed to seriously consider an increase in rates at the next bank meeting. There will most likely be a rate hike because more recent data do not signal any demand pressure and a rise in interest rate may reverse growth. The yen, therefore, will not recover soon. Similarly, the dollar may remain stay put since the Federal Reserve is unlikely to step up the interest rates. As such the euro will harden further against both the yen and the dollar.

In this currency muddle, the behaviour of the rupee has been rather strange. Most other countries, including China, are taking utmost care to stop inflation from crossing 2 per cent. Going by 6.5 per cent inflation in India, the rupee should have actually weakened. But in reality, it hardened 5.9 per cent against the dollar since August, in contrast to the inflexibility of the yuan.

SHARE THIS ARTICLE ON
app
Close
Farmers raise slogans as they ride tractor during an ongoing protest against the new farm laws, at the Delhi-Ghazipur border on Monday.(ANI Photo)
Farmers raise slogans as they ride tractor during an ongoing protest against the new farm laws, at the Delhi-Ghazipur border on Monday.(ANI Photo)

Farmers want permission for tractor rally on Republic Day, SC hearing today

By hindustantimes.com | Edited by Amit Chaturvedi
UPDATED ON JAN 20, 2021 07:50 AM IST
The Delhi Police in its application has said that no tractor rally by farmers should be allowed as it will malign the nation globally.
Close
Farmers sitting inside their tractor-trolley amid their protest against the new farm laws at SInghu Border in New Delhi. (ANI Photo)
Farmers sitting inside their tractor-trolley amid their protest against the new farm laws at SInghu Border in New Delhi. (ANI Photo)

LIVE: Government to hold tenth round of talks with farmers today

By hindustantimes.com
UPDATED ON JAN 20, 2021 07:35 AM IST
In the last meeting, the government had asked farmers to form an informal group among themselves and submit a draft to the government regarding their demands. Union Agriculture minister Narendra Singh Tomar has said that the government will discuss the demands with an "open mind" in today's meeting.
Farmers raise slogans during a protest against the new farm laws at Delhi-UP Ghazipur border, in New Delhi. (PTI Photo )
Farmers raise slogans during a protest against the new farm laws at Delhi-UP Ghazipur border, in New Delhi. (PTI Photo )

Farmers, govt to hold 10th round of talks to end impasse over agri laws today

By hindustantimes.com | Written by Kanishka Sarkar, Hindustan Times, New Delhi
PUBLISHED ON JAN 20, 2021 07:25 AM IST
The government has also proposed that the 41-member farmers’ delegation form a “smaller group” with “people who have expertise on laws”.
Close
Prime Minister Narendra Modi.(PTI)
Prime Minister Narendra Modi.(PTI)

PM to release financial assistance to over 6 lakh beneficiaries under PMAY-G

ANI
UPDATED ON JAN 20, 2021 06:38 AM IST
Union Rural Development Minister Narendra Singh Tomar and Uttar Pradesh Chief Minister Yogi Adityanath will also be present on the occasion.
Close
On January 16, Prime Minister Narendra Modi launched the world's largest vaccination drive against the pandemic.(Bloomberg)
On January 16, Prime Minister Narendra Modi launched the world's largest vaccination drive against the pandemic.(Bloomberg)

Recipients to be followed-up for 3 months after 2nd dose of Covaxin, says ICMR

ANI
PUBLISHED ON JAN 20, 2021 06:28 AM IST
India has given emergency use authorisation to two Covid-19 vaccines being manufactured in the country - Covishield and Covaxin.
Close
“This is the first case in Barwani under the new legislation,” Barwani police station in-charge Rajesh Yadav said.(Representative image)
“This is the first case in Barwani under the new legislation,” Barwani police station in-charge Rajesh Yadav said.(Representative image)

28-yr-old held in MP under new religious conversion law

By HT Correspondent, Barwani
PUBLISHED ON JAN 20, 2021 05:08 AM IST
“On the basis of a written complaint filed by a 22- year-old woman, a 28-year-old man was arrested on Monday on charges of rape and under provisions of the Freedom of Religion ordinance,” Barwani police station in-charge Rajesh Yadav said.
Close
In a separate decision, the ministry waived of the 75%-mark eligibility criteria in class 12 exams for students seeking admission to central technical and engineering schools via JEE (Main).(HT Photo)
In a separate decision, the ministry waived of the 75%-mark eligibility criteria in class 12 exams for students seeking admission to central technical and engineering schools via JEE (Main).(HT Photo)

Candidates to get more questions to choose from in JEE and NEET

By Prashant K Nanda, New Delhi
UPDATED ON JAN 20, 2021 06:24 AM IST
“The syllabus for JEE (Main 2021) to remain same as the previous year. But students will be given the choice to answer 75 questions (25 questions each in physics, chemistry & mathematics) out of 90 questions (30 questions each in physics, chemistry & mathematics),” the ministry said.
Close
Former executive editor of NDTV Nidhi Razdan's case would be transferred to the cyber cell-specialised unit, said a senior cop, preferring anonymity.(Yogesh Kumar/Hindustan Times )
Former executive editor of NDTV Nidhi Razdan's case would be transferred to the cyber cell-specialised unit, said a senior cop, preferring anonymity.(Yogesh Kumar/Hindustan Times )

Nidhi Razdan files complaint over online fraud

By HT Correspondent, New Delhi
PUBLISHED ON JAN 20, 2021 04:14 AM IST
Nidhi Razdan’s counsel Shri Singh said a complaint was filed at Greater Kailash police station on Monday. Singh said that they had earlier approached the Srinagar cops but were advised to contact Delhi Police since it was an issue related to the jurisdiction.
Close
Foreign secretary Harsh Shringla talked of Indo-Pacific joint effort a workshop to ensure the region remains open and peaceful.(PTI)
Foreign secretary Harsh Shringla talked of Indo-Pacific joint effort a workshop to ensure the region remains open and peaceful.(PTI)

Harsh Shringla calls for joint efforts to ensure peace in Indo-Pacific

By Rezaul H Laskar, New Delhi
PUBLISHED ON JAN 20, 2021 04:01 AM IST
“An Indo-Pacific guided by norms and governed by rules, with freedom of navigation, open connectivity, and respect for the territorial integrity and sovereignty of all states, is an article of faith for India,” Shringla told a workshop organised by the ORF and the embassies of France and Japan.
Close
Members of Supreme Court-constituted committee (L to R) Ashok Gulati, Anil Ghanwat and Pramod Kumar Joshi interact with the media in New Delhi on Tuesday. (HT photo)
Members of Supreme Court-constituted committee (L to R) Ashok Gulati, Anil Ghanwat and Pramod Kumar Joshi interact with the media in New Delhi on Tuesday. (HT photo)

SC panel on farm laws holds first meet, invites farmers for talks

By Zia Haq, New Delhi
PUBLISHED ON JAN 20, 2021 03:43 AM IST
The committee will begin its consultations with farm unions on January 21. “Invitations have been sent to unions which are both pro- and anti-farm laws,” Anil Ghanwat, a member of the committee told HT.
Close
To ensure fewer doses are wasted each day, many centres started walk-in vaccination from Tuesday.(PTI)
To ensure fewer doses are wasted each day, many centres started walk-in vaccination from Tuesday.(PTI)

1,000 vaccine doses wasted in Delhi so far: Health officials

By Sweta Goswami, New Delhi
UPDATED ON JAN 20, 2021 04:43 AM IST
Teams from a number of vaccination centres and health officials overseeing the city’s inoculation drive said at least 1,000 doses of the Covid-19 vaccines have been wasted in Delhi so far. Health officials attributed the wastage mostly to fewer people coming up to get the jab.
Close
On Tuesday, the farmers also shared the route map of their proposed tractor rally and said that the parade will touch all the borders connecting Delhi with Haryana and Uttar Pradesh.(PTI)
On Tuesday, the farmers also shared the route map of their proposed tractor rally and said that the parade will touch all the borders connecting Delhi with Haryana and Uttar Pradesh.(PTI)

Police urge farmers to shift R-Day tractor rally to KMP e-way

By karn pratap singh, New Delhi
PUBLISHED ON JAN 20, 2021 02:31 AM IST
While special commissioner (intelligence) Deependra Pathak led the police team from Delhi, seven leaders of Sanyukt Kisan Morcha, including Balbir Singh Rajewal and Darshan Pal, represented the farmers. Since no consensus could be reached on issue, another meeting has been scheduled on Wednesday.
Close
Rahul Gandhi said that China has a “clear strategic vision” but India doesn’t and China has twice tested India in Doklam and Ladakh(Sanjeev Verma)
Rahul Gandhi said that China has a “clear strategic vision” but India doesn’t and China has twice tested India in Doklam and Ladakh(Sanjeev Verma)

Rahul Gandhi says India ‘owned’ by a few; Centre hits back

By HT Correspondent, New Delhi
PUBLISHED ON JAN 20, 2021 01:40 AM IST
In a no-holds-barred attack against the ruling dispensation a day before the tent round of talks between farmers and the Centre, Rahul Gandhi compared the alleged monopolies that he said were being created with the British Raj.
Close
The truck ran over the construction workers on the Kim-Mandvi road shortly after midnight(PTI)
The truck ran over the construction workers on the Kim-Mandvi road shortly after midnight(PTI)

14 migrant workers, a yr-old infant crushed by truck in Surat

By HT Correspondent, New Delhi
PUBLISHED ON JAN 20, 2021 01:27 AM IST
The incident took place near Kosamba village, around 60 km from Surat, when the truck driver apparently lost control over the vehicle after hitting a sugarcane laden tractor. The deceased included six men, eight women and a baby girl.
Close
The IAF said the two sides would “put into practice operational experience gained across terrains and spectrums and endeavour to exchange ideas and best practices to enhance interoperability”.
The IAF said the two sides would “put into practice operational experience gained across terrains and spectrums and endeavour to exchange ideas and best practices to enhance interoperability”.

India, France air exercise to kick off in Rajasthan today

By Rahul Singh, New Delhi
PUBLISHED ON JAN 20, 2021 01:01 AM IST
“As part of Indo-French defence cooperation, the IAF and French Air and Space Force have held six editions of exercises named ‘Garuda’, the latest being in 2019 at Air Force Base Mont-de-Marsan, France,” the IAF said on the eve of the exercise.
Close
SHARE
Story Saved
OPEN APP