Today, tackling and reducing inflation has become its primary goal in light of these historical inflation levels. The Federal Reserve, acting as the central bank of the United States, is tasked with the mandate of price stability and full employment. The gravity of the situation is such that President Joe Biden has himself met with Jerome Powell, chair of the Federal Reserve, and has expressed sympathy for price inflation woes (while ignoring monetary inflation completely). The US economy today is suffering from startling levels of both monetary and price inflation prices rose by a historic 8.6 per cent in May breaking its 40-year high mark. The falling value of the rupee could therefore set off alarms, but this would be as misleading as interpreting the sound of falling water from a neighbour’s hose as the sound of a rain shower. This means that currency markets value each country’s currency in relation to the dollar. The dollar is currently the world’s reserve currency. This is one more in a sequence of events that have eroded the international purchasing power of the Indian rupee.Īs the mood of financial markets and their many commentators swing, it is crucial to examine the cause of the rupee’s fall, in order to understand it and implement the correct solutions. The Indian rupee has slipped against the US dollar yet again, registering an 18 paise to close at a record low of 79.03 during trading.
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