By Pavas Gupta
In the previous week, the world economy saw both wins and losses – a win for Amazon, which joined the big league with its trillion-dollar market valuation, and a loss for the Indian economy, as the rupee, once again, reached an all-time low. Here are stories about the global economy you may have missed last week.
Amazon joins the trillion-dollar club
Almost a month after tech titan Apple marked its place in history as the world’s first publicly-traded company with a $1 trillion market valuation, Amazon.com Inc joined the league. The push came after the online retailer’s shares rose as much as 1.9%. Amazon’s shares have more than tripled since 2015, reaching a high of $2,050.50 on Tuesday. Tech competitors Alphabet Inc. and Microsoft Corp. are also closing in on the mark.
Rupee crosses 72 mark against the dollar
For the seventh consecutive session, the rupee continued its losing streak against the United States dollar. On Thursday, the Indian currency breached the 72 mark for the first time. This represents a fall of more than 12% on a year-to-date basis, making it one of the worst-performing currencies in Asia. The further drop in the value of the rupee comes amid global turbulence and concerns on the macroeconomic front.
Investors expressed their concern over sustained foreign capital outflows and a widening current account deficit in the wake of rising crude oil prices. On Wednesday, Finance Minister Arun Jaitley accredited the fall in the currency to global factors and emphasized that the fiat was better off compared to other currencies, especially those in emerging-market economies.
A weaker rupee has had a negative impact on import bills, foreign education, and travel. Petrol and diesel prices have borne the brunt of depreciation.
India’s current account deficit eases marginally to 2.4%
In the April-June quarter of 2018-19, India’s Current Account Deficit (CAD), expressed as a percentage of its Gross Domestic Product (GDP), declined marginally to 2.4%, Reserve Bank of India (RBI) data released on Friday showed. This is compared to 2.5% in the previous year’s period.
In terms of value, the CAD was higher at $15.8 billion in April-June 2018-19 against $15 billion in the same quarter last year. This is primarily due to a higher trade deficit.
Petrol and diesel prices reach highest-ever
Petrol prices in New Delhi crossed the Rs 80-mark for the first time on Saturday, as continuous depreciation of the rupee rendered imports costlier. According to the price notification issued by state fuel retailers, the price of petrol was raised by 39 paise, and diesel, by 44 paise per litre on Saturday.
The increase pushed the petrol price in the capital to Rs 80.38 per litre, while diesel reached an all-time high of Rs 72.51 a litre.
The dramatic rise in prices has fuelled calls for a cut in excise duties. However, Finance Minister Arun Jaitley has remained non-committal, pointing to international oil price volatility. Opposition parties have called for a nation-wide ‘Bharat Bandh’ on Monday in protest against spiralling fuel prices.
Dollar vs yen, Trump expected to challenge Japan
On Friday, after a report suggested that Japan will be the next country with which President Trump will raise trade issues as the dollar slipped against the yen. According to CNBC television, President Trump hinted to a Wall Street Journal columnist that he might broach trade issues with Japan next.
Pavas Gupta is a writing analyst at Qrius.