If only it belonged to us.

The conflict in Ukraine may seem remote from India. "Exports to the region are just 1 percent and the imports from the region are 2 percent," moneycontrol. But, "Russia accounts for almost 90 percent of India's sunflower oil requirement, nearly 17 percent of potash fertiliser and 60 percent of NPK fertiliser imports." The biggest risk is the price of oil. The government raised excise duties on fuel when prices were low and reduced them by Rs 5 on petrol and Rs 10 on diesel when crude oil prices rose to $75-80 dollars a barrel. The benchmark Brent crude is trading at $111 per barrel this morning, oilprice.com. The government needs to reduce duties further to control inflation and prevent further reduction in consumer demand. But that could lead to higher fiscal deficit. "A wider fiscal with a tightening monetary policy globally could also lead to some currency depreciation." The rupee has fallen to 76.12 against the dollar this morning, xe.com. The rupee has fallen from a monthly average of 41 to the dollar in April 2007 to over 76 in March 2022, Mint. The weaker rupee is good for exports but increases the price of imports and adds to inflation. "Consumers may have to pay more for their daily essential items with FMCG (fast moving consumer goods) mulling another round of price hike to offset the impact of an unprecedented level of inflation in commodity prices such as wheat, palm oil and packaging materials," ET. "India's goods exports rose 25.1% year on year to $34.57 billion in February", while "imports during the month jumped 36% to $55.43 billion", so that "the trade deficit widened to $20.88 billion from $13.12 billion in the year-ago period", ET. Higher payments in dollars convert to much higher prices in rupees because one dollar now buys more rupees. Central banks of other countries have been increasing interest rates to cap rising inflation, except for the People's Bank of China (PBOC) which was the only one among major economies to reduce its rate by 10 basis points in January 2022, global rates.com. The Reserve Bank of India (RBI) has adopted different tactics. It has clung on to its interest rate of 4% for 24 months since March 2020 despite rising prices, TOI, to help the government to borrow cheaply. To control prices it is trying to manipulate the value of the rupee higher against other currencies. "The Country's foreign exchange reserves fell by $9.64 billion to $622.275 billion during the week ended March 11, 2022, as the rupee depreciated against the US dollar amid the rise in crude oil prices and capital outflows due to sustained selling by foreign portfolio investors (FPI)," TIE. The RBI may think that it is genius while other central banks are fools. Time will tell. Perhaps, it does not understand that it is the Reserve Bank of India, and not the Reserve Bank of the government. Must be getting very good salaries.