Seventy rupees against one US dollar was a psychological barrier that RBI tried to support at least temporarily. But the hit on Argentine and Turkish currencies created a snow ball effect globally on emerging markets. It is not only India but South Africa, Brazil and Indonesia were also hot hard.
Indian rupee saw its biggest monthly drop in three years and a record low drop. It is spreading like a contagious disease. Emerging markets are more prone to be hurt against US dollar. Chinese and US trade tensions are fueling the economic anxiety further more seriously. Current account deficit of India is a problem. World wants to see that India is serious about reducing this deficit and making enough efforts to control further expansion of its deficit.
Current world economic order demands that India comes clear on its promises to control current deficit issue. It is like buying too much and not selling enough in return.
This crisis will effect many world economies and their internal economic and political stability and growth. Indian rupee depreciation problem is also not expected to go away too soon, no matter what politicians of India or any other country may claim. It will be particularly unpleasant for Prime Minister Modi facing next year general election despite his many good economic decisions (though demonetization as bad one) . Global trend and current account deficit are not easy issue to explain to the voter.
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