The dollar or the rupee?

"In 2008, the cost of Brent oil surged to an all time high of $147.50 per barrel, straining the finances of many nations. But the same year, the US dollar plunged to record low against the currencies of America's major trading partners, easing some of the pain of expensive oil," wrote Javier Blas. In 2008, one dollar bought Rs 48.88, falling to Rs 46.37 in 2009, to Rs 46.21 in 2010, and to Rs 44.17 in 2011, Thomas Cook. "For many oil importing nations, crude oil imports became expensive, but not quite as exorbitantly costly in their local currencies as they might otherwise have been." This morning the US dollar is trading at Rs 77.77, ET, about 80% higher than in 2008. "Crude oil has risen 70% in the past year, and currently trades at about $120 a barrel. At the same time, the dollar has gained 10% since mid-2021. That's creating balance-of-payments crises in many oil-importing nations, particularly in Africa, Latin America and Asia." The price of India's basket of crude oil hit a decade-high of $121.28 on 9 June, "matching levels seen in February/March 2012, according to data available from the oil ministry's Petroleum Planning and Analysis Cell (PPAC)," ET. "Retail fuel rates, however, continue to be on a freeze in India." "The sources said the industry was selling petrol at a loss of about Rs 18 per liter and diesel at Rs 21 per liter." In May, the price of jet fuel was hiked by 5.29% to Rs 1,23,039.71 per kl (Rs 123 per liter) in the national capital, Mint. "This is the 10th straight increase in jet fuel prices this year." "The higher cost of air travel has already started affecting demand," ET. "Daily traffic had crossed 400,000 in April and May, but fell to 320,000-350,000 later in May and so far in June," said an unnamed airline executive. "The revenue foregone on duty reductions on petrol and diesel is expected to be in excess of Rs 1 lakh crore (Rs 1 trillion) for the fiscal year. Add to this an extra Rs 1.1 lakh crore for fertiliser subsidy and Rs 80,000 crore (Rs 800 billion) for an extension of food security, and the bill runs up to an additional percentage point to the 6.4% fiscal deficit budgeted for 2022-23," ET. "The central bank...raised the inflation forecast by 100 basis points, up 220 basis points in a matter of two months" to 6.7% for FY23, while retaining its growth forecast at 7.2%, ET. The Reserve Bank's (RBI's) priority at this juncture is inflation control, editorial in the Mint. "Its war chest of reserves, which has lately fluctuated around $600 billion, remains large enough to keep an external crisis at bay." "Selling dollars would reduce domestic liquidity and also ease swelling oil bills." "After rising for two consecutive weeks, the country's foreign exchange reserves declined by $306 million to $601.057 billion in the week ended June 3, according to RBI data," ET. "The central bank's annual report for 2021-22, its first for a reconfigured financial year (April-March, changed from July to June), was released recently," wrote Rajrishi Singhal. "Unfortunately, the report seems to have become an official commendation of government performance rather than a document providing a critical review of economic developments." Instead of being the nation's bank the RBI seems to have become the government's piggy bank. Can it be trusted with our money?