CURRENT AFFAIRS

Detailed explanation-1: -The rupee was the worst-performing Asian currency in 2022, witnessing a fall of around 10 per cent against the greenback. This decline was mainly on account of appreciation in the US currency on safe haven appeal amid fears of recession and inflation across many parts of the world and Russia-Ukraine war.

Detailed explanation-2: -The correct answer is Exports Cheaper and Imports Costlier. When the rupee depreciates, it loses value with respect to the dollar. This means it takes more rupees to exchange with a dollar.

Detailed explanation-3: -Higher US interest rates lead to a stronger dollar, exerting pressure on emerging market currencies like the rupee. The Fed raised interest rates by a massive 425 bps in 2022 to tame high inflation in the US.

Detailed explanation-4: -The primary catalyst behind the dollar’s turn lower has been changing expectations around Fed policy in response to evidence that inflation has peaked. That’s led to a belief among investors that the Fed will pause its interest rate increases before the second quarter, and begin lowering rates by the end of 2023.