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The US Dollar’s Enduring Strength: Separating Fact from Fiction

Recently, numerous articles have been written on the demise of the dollar. The argument is that China, the second largest economy after the US, is increasingly convincing the world’s largest suppliers of energy, including Russia, Saudi Arabia, Iran, and Venezuela, to trade in Chinese yuan. This, according to the commentators, will usher in the demise of the ‘petrodollar’. It would then be a matter of time before the US economy crumbles, they argue.

Depreciation of the Rupee vis-a-vis Dollar

There is much fretting about the depreciation of the rupee vis-à-vis the dollar. It is commonplace to equate a strong currency with a strong economy. But that is not true, especially in an emerging economy. Rupee depreciation is nothing to worry about as long as there isn’t too much volatility and sufficient foreign exchange reserves.