Only half naked.

"On 13 June, the rupee hit an all-time low of 78.29 to the dollar. Market participants expect it to trade in the range of 79-80 to a dollar going ahead, and touching 80 by the end of December," wrote Gopika Gopakumar. The RBI predicted the rupee will be at 76 to the dollar in 2022-23 and a 5% fall will raise inflation by 20 basis points. A weaker rupee will also increase interest payments on $226.4 billion of commercial borrowing. The RBI has been selling dollars to defend the rupee so that our foreign exchange reserves have fallen to $596.45 billion as of 10 June. "India's foreign exchange reserves grew $8.895 billion to reach a new record high of $642.453 billion in the week ended September 3, 2021," Mint. One reason for the fall is that, "Foreign portfolio investors (FPIs) have pulled out $39 billion (about Rs 3 trillion) from Indian equities through the stock exchange route in the nine months to June, data from NSDL show. Their assets under management fell by 18.6% to $531 billion at the end of the first fortnight of June, compared to $653 billion at the beginning of the year," moneycontrol. The dollar is trading at Rs 78.16 this morning, xe.com. In April-May 2022, "Although India's exports rose by 25%, imports surged even higher, by 45%, when compared to April-May FY22. The deficit thus more than doubled $45 billion, although it is much less at $27 billion if both goods and services are taken into account. Even the latter marks a five-fold increase from a year earlier," FE. Current Account Deficit could double to 3.1% of GDP according to Fitch Ratings. "Current Account Deficit (CAD) is the shortfall between money received by selling products to other countries and the money spent to buy goods and services from other nations," BS. India has increased import of discounted oil from Russia to $2.3 billion in a year to April, BS. "In April, India's crude oil imports from Russia were valued at $1.3 billion, 57 percent of India's total inbound shipments from Russia. Other major imported items during the month included coal, soybean and sunflower oil, fertilisers and non-industrial diamonds." The basket of crude oil that India buys touched $121.28 on 9 June "matching levels last seen in February/March 2012, according to data available from the oil ministry's Petroleum Planning and Analysis Cell (PPAC)", BS. Brent crude is down 3% to $111.1 per barrel this morning, oilprice.com. "Eight years after Prime Minister Narendra Modi first urged international companies to 'Make in India' Asia's third-largest economy is seeing many foreign firms give up on the country," DH. "A total of 2,783 foreign companies with registered offices or subsidiaries in India closed their operations in the country between 2014 and November 2021, Commerce and Industry Minister Piyush Goyal told Parliament." The monthly economic report from the Finance Ministry stated that "India faces near term challenges in managing its fiscal deficit, sustaining economic growth, reining in inflation and containing current account deficit. This while maintaining a fair value of the Indian currency," TOI. But the risk of stagflation is low. Whew, what a relief. We are only half naked. As was the Father of the Nation, HT.