Current Affairs Aug 2022
In today’s issue, we will cover the top happenings in August.
Repo rate hike again.
What is Repo Rate? The Repo rate is the rate at which central banks lend money to other commercial banks if they run short of money. An increase would mean banks would borrow lesser money and compensate for it by increasing the interest rate of their loans. This makes people borrow less and subsequently spend less, leading to lowering of prices in principle
The RBI has once again increased the repo rate by 50 basis points in its attempt to fight against inflation for the third time since April. From a 20-year low of 4%, now it stands at 5.4%, and the experts believe this is not the end. Many central banks worldwide are following the same strategy to tame inflation. COVID-19 is one of the main reasons which drove the prices up and consequently led to the increased inflation rate.
Big Bull passes away.
Veteran Investor Rakesh Jhunjhunwala passed away on the 14th of august following a Cardiac arrest. Known as the ‘Big bull’ of Dalal Street or Warren buffet of India, he was an investor, trader, and businessman with astounding success. Charted Accountant by qualification, he started investing in 1985 with a capital of 5000 Rupees when he was still in college and began to rise quickly in the market. In 2022 his assets were worth 46000 Crore Rupees making him the 36th richest person in India.
India gears up for 5G launch.
Why 5G? What is Science doing in Current Affairs? The radio waves used to carry out communications fall in the electromagnetic spectrum. The spectrum can further be divided into bands from low to high frequency. While the lower bands have good coverage, higher bands offer incredible speeds. The government auctions the bands that the companies should use for their network service as a source of revenue as the government owns them.
With the 5G spectrum auctions completed, companies are set to launch 5G by the end of August. Reliance Jio, Airtel, Vodafone Idea, and Adani group were the competing companies with massive spending of 1.5 lakh crore in the auction. Jio spent a total of nearly 88,000 crores and bought the coveted 700Mhz band, which is said to offer better service. They are followed by Airtel, who spent nearly 43,000 crores. Both are gearing to launch their services across 13 cities in the country, which includes Delhi, Gurugram, Bengaluru, Kolkata, Chandigarh, Jamnagar, Ahmedabad, Chennai, Hyderabad, Lucknow, Pune, and Gandhi Nagar.
FPIs invest 22,000 crores in Indian markets.
FPI, What? Foreign Portfolio Investment (FPI) consists of assets held by investors in other countries. Although they don’t have a direct influence on the company’s assets, FPIs are relatively liquid, making them easier to sell compared to FDI (Foreign Direct Investment).
Foreign investors have aggressively bought Indian equities and have invested nearly 22,000 in the first 2 weeks of August. After turning into net buyers for the first time in July in 8 months, the amount was way higher than the 5000 crore investment in the entire July. This was observed due to the fading inflation concerns and tight monetary policies of the central banks and is expected to grow further. India’s retail inflation fell to 6.7% but is still ahead of RBI’s comfort level of 6%.
Foreign Exchange reserves fall.
Why Forex? Forex reserves are assets held by the central banking entities in foreign currencies. The most important reason for maintaining them is to make sure that the government have backup fund in case their currency devalues or become insolvent. They can also influence monetary policies.
India’s Forex reserves fell again after a sharp rise in the month of July. The reserves fell by $875 million, followed by a dip again by $2.238 billion during the 1st and 2nd week of august to sit at $570.74 billion. This was again followed by a fall of $6.69 billion in 3rd week to a 2-year low of $564 billion. While the assets held can be of many forms, the dip was observed due to the fall of Foreign Currency Assets (FCA) which is a major contributor to RBI’s overall reserves. It essentially accounts for the non-US currencies like Pounds, Euros, Yen, etc. The forex reserves have witnessed a fall as a result of the Reserve Bank of India’s intervention to stabilize the Rupee’s volatility.
That’s all from us today. Stay tuned for the next issue!!
