Mentor’s comment-
- https://indianexpress.com/
article/opinion/columns/why- there-is-no-reason-to-panic- over-the-rupee-8039724/ - In the intro, mention the recent all time low reached by rupee.
- In the body, mention the relationship between the domestic fundamentals and value of the currency. Next mention the weak domestic fundamentals responsible for depreciation between 2008-2012. Also mention the relationship now between the increase in the dollar index and depreciation of rupee in the aftermath of Ukraine war. In the next part mention the policy rate normalisation in the US, and lag in the Eurozone and other economies resulting in appreciation of dollar.
- Conclude by mentioning that the dollar will continue to remain strong in the near future.
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Chandan
Decent attempt but the answer is a bit uni-dimensional with focus only on interest rate hikes in US.
Introduction is fine.
In next part, your points are fine, plus you could mention about impacts of Russia-Ukraine war, increasing current account deficit etc
In next part, you have mentioned about the global financial crisis.. That’s fine but also mention about weak domestic fundamentals.. Fiscal deficit, debt burden, inflation, CAD etc aiding in depreciation of rupee.
Conclusion is fine, 1-2 lines on measures taken by RBI could be mentioned before that- Relaxations on NRI deposits to ease investments in government and corporate bonds; measures for settlement of international trade in rupees etc
Keep practicing. 🙂
3.5/10
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Chandana
This is a 10 marker, try to finish the answer inside 2 pages.
Introduction is fine but too much explanation of basics is given, no need to start from scratch.. Examiner is not exactly a layman. For example, after first line just mention that rupee depreciated to an all time low( Rs. 80/dollar)..then move on.
Next two parts are fine, in fundamentals you could just mention the points.. Good use of flowchart.
In next part on causes of recent depreciation some good points are mentioned, current account deficit could be talked about.
However, tightening of monetary policy by RBI is not one of the reasons, actually it contributes in decreasing the liquidity which in turn could increase the value of rupee, so you can avoid that.
Finance Minister statement not required, address just what is being asked otherwise it will take up a lot of time. Plus this is not a question about inflation. Not required to talk in detail about it.
Next two parts are fine, conclusion is decent.
Keep practicing. 🙂
3.5/10
JmQPOijgofaERD
Hello
Introduction is fine, mention about the slide of rupee.
In differences, you have talked of flight of investment and tightening of monetary policy by US Fed but these things have happened this time around too. You can talk about weak domestic fundamentals in that period, high fiscal deficit and debt burden, domestic inflation, high CAD.. This time around most of the issues are external with inflation also mostly being imported.
Next part about factors is good, most of the points are covered.
Conclusion is fine, 1-2 lines on measures taken by RBI could be mentioned before that- Relaxations on NRI deposits to ease investments in government and corporate bonds; measures for settlement of international trade in rupees etc
Keep practicing. 🙂