Why is India's currency on the slide?

New low against the dollar today.

The Indian rupee crashed to a new low against the US dollar today as foreign investors continued to pull their money out of the country. Following a slump of 3 per cent today, the rupee has now depreciated by 24 per cent this year from 55 per dollar at the end of 2012 to 68 per dollar currently.

According to Timetric wealth analyst Shekhar Tripathi the depreciation is being caused by a number of factors. These include rising oil prices and a high current account deficit. He stated "the price of crude puts tremendous stress on the Indian Rupee as India has to import the bulk of its oil requirements in order to satisfy local demand."

A lack of government reform has also been highlighted as a contributing factor as the Indian government could have introduced far more reforms during the boom years between 2003 and 2008. Instead they failed to sufficiently build infrastructure or liberalize markets for labour, energy and land during this period and now it is far more difficult to source investment for this.

According to Progressive Media analyst Sunil Agarwal "the lack of economic reform and political paralysis was a major cause of the recent depreciation with the Reserve Bank of India sending out mixed signals on monetary policy".

He also pointed to the recent recovery in the US which has encouraged US investors to pull their money out of emerging markets and invest more money onshore.

India’s problems are not limited to the recent depreciation. Despite relatively strong growth over the past decade India remains one of the poorest countries in the world with the bulk of the population still living below the poverty line.

According to the latest Credit Suisse Wealth Book India’s wealth per capita amounted to US$2,560 per person at the end of 2012 which is well below the worldwide average of US$31,500. It also compares poorly to other major emerging markets such as China (US$15,000) and Brazil (US$16,500) and perhaps most alarming it is well below the fast growing Indonesia (US$7,100).

The Indian rupee crashed to a new low against the US dollar today. Photograph: Getty Images

Andrew Amoils is a writer for WealthInsight

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BHS is Theresa May’s big chance to reform capitalism – she’d better take it

Almost everyone is disgusted by the tale of BHS. 

Back in 2013, Theresa May gave a speech that might yet prove significant. In it, she declared: “Believing in free markets doesn’t mean we believe that anything goes.”

Capitalism wasn’t perfect, she continued: 

“Where it’s manifestly failing, where it’s losing public support, where it’s not helping to provide opportunity for all, we have to reform it.”

Three years on and just days into her premiership, May has the chance to be a reformist, thanks to one hell of an example of failing capitalism – BHS. 

The report from the Work and Pensions select committee was damning. Philip Green, the business tycoon, bought BHS and took more out than he put in. In a difficult environment, and without new investment, it began to bleed money. Green’s prize became a liability, and by 2014 he was desperate to get rid of it. He found a willing buyer, Paul Sutton, but the buyer had previously been convicted of fraud. So he sold it to Sutton’s former driver instead, for a quid. Yes, you read that right. He sold it to a crook’s driver for a quid.

This might all sound like a ludicrous but entertaining deal, if it wasn’t for the thousands of hapless BHS workers involved. One year later, the business collapsed, along with their job prospects. Not only that, but Green’s lack of attention to the pension fund meant their dreams of a comfortable retirement were now in jeopardy. 

The report called BHS “the unacceptable face of capitalism”. It concluded: 

"The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. 

“The tragedy is that those who have lost out are the ordinary employees and pensioners.”

May appears to agree. Her spokeswoman told journalists the PM would “look carefully” at policies to tackle “corporate irresponsibility”. 

She should take the opportunity.

Attempts to reshape capitalism are almost always blunted in practice. Corporations can make threats of their own. Think of Google’s sweetheart tax deals, banks’ excessive pay. Each time politicians tried to clamp down, there were threats of moving overseas. If the economy weakens in response to Brexit, the power to call the shots should tip more towards these companies. 

But this time, there will be few defenders of the BHS approach.

Firstly, the report's revelations about corporate governance damage many well-known brands, which are tarnished by association. Financial services firms will be just as keen as the public to avoid another BHS. Simon Walker, director general of the Institute of Directors, said that the circumstances of the collapse of BHS were “a blight on the reputation of British business”.

Secondly, the pensions issue will not go away. Neglected by Green until it was too late, the £571m hole in the BHS pension finances is extreme. But Tom McPhail from pensions firm Hargreaves Lansdown has warned there are thousands of other defined benefit schemes struggling with deficits. In the light of BHS, May has an opportunity to take an otherwise dusty issue – protections for workplace pensions - and place it top of the agenda. 

Thirdly, the BHS scandal is wreathed in the kind of opaque company structures loathed by voters on the left and right alike. The report found the Green family used private, offshore companies to direct the flow of money away from BHS, which made it in turn hard to investigate. The report stated: “These arrangements were designed to reduce tax bills. They have also had the effect of reducing levels of corporate transparency.”

BHS may have failed as a company, but its demise has succeeded in uniting the left and right. Trade unionists want more protection for workers; City boys are worried about their reputation; patriots mourn the death of a proud British company. May has a mandate to clean up capitalism - she should seize it.