The Art of the Commonplace

A crowd whose discontent has risen no higher than the level of slogans is only a crowd. But a crowd that understands the reasons for its discontent and knows the remedies is a vital community, and it will have to be reckoned with.
I would rather go before the government with two people who have a competent understanding of an issue, and who therefore deserve a hearing, than with two thousand who are vaguely dissatisfied.

But even the most articulate public protest is not enough. We don’t live in the government or in institutions or in our public utterances and acts, and the environmental crisis has its roots in our lives. By the same token, environmental health will also be rooted in our lives. That is, I take it, simply a fact, and in the light of it we can see how superficial and foolish we would be to think that we could correct what is wrong merely by tinkering with the institutional machinery. The changes that are required are fundamental changes in the way we are living.

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#India – #Rupee – #Dollar – Battle Continues

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The rupee fell past 64 to the dollar for the first time on Tuesday and bond yields spiked to a five-year high before the RBI stepped in to sell dollars, as India bore the brunt of the global emerging markets selloff. Underscoring how hard it is for the government to push through reforms despite the urgency of a deteriorating economic outlook, parliament was adjourned on Tuesday due to protests by members over a corruption scandal.

 

Later on Tuesday, India was due to hold a $9.3 billion sale of government debt quotas, a gauge of foreign investor interest in local assets. Bankers said that the debt limits at the auction may get taken up, but at rock-bottom prices.

 

 

Selling of dollars by the RBI helped the partially convertible rupee recover somewhat to 63.65 to the dollar.

Rupee one-on-one with $Dollar

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With only enough cash in the Reserve Bank of India (RBI) to pay for seven months of imports, $172 billion of debt falling due in the next eight months and weak fund inflows, the balance of payments position is undermining its ability to defend a tumbling rupee.

A heavy dependence on imported energy, gold and technology means India has historically run a current account deficit, which it has funded by attracting foreign money into stocks, bonds and corporate investment.

But as global investors turn away from emerging markets in anticipation of the U.S. Federal Reserve starting to wind back its stimulus, India’s weak external position makes it more vulnerable to outflows and a balance of payments deficit.

India has $280 billion of foreign exchange reserves. That is only enough to cover seven months of import bills, by far the lowest of the BRICs, the four major emerging market economies.

That has left the RBI with limited firepower to support a rupee which has fallen 12 percent since the start of May and hit a record low of 61.80 to the dollar last week.

India “can’t afford to defend the currency much with such little reserves,” a policymaker said, declining to be identified as he was not authorised to speak with media.

The RBI is said to consider three months of import cover to be the minimum acceptable level, but some central bank insiders are said to be uncomfortable that reserves have run down to the lowest in terms of import cover since 1996.

“The lower import cover continues to be a source of discomfort,” said another policymaker.

“We would like to increase the import cover. If there is a gap in the BOP, then the currency will have to take a hit.”

That said, India is not yet looking at a repeat of its 1991 crisis. Then, with only enough reserves to cover three weeks of imports, the government was forced to pledge its gold in order to pay its bills and had to push through reforms to start opening up the economy.