Netaji, realising that he is now moving into morbid obesity, recently started going to an expensive gym. Apart from the lemon water that he is forced to have every morning under the new regime, he also has been told to stay away from his favourite samosas (more like run in the opposite direction on countering them) and cut down chai from the usual 14 cups (with extra malai) to two cups of green tea. It is Day 3 of the new regime. Netaji is feeling distinctly disgruntled with life in general, and dietician in particular. Swearing under his breath, he laboriously clambers on to the weighing machine to find that his weight has actually increased from 79 kg to 80 kg.

Netaji (exclaiming with disbelief): Now, how is that even possible! Imagine moving from 79 to 80 within three days!

Clever Guptaji (enters the office and thinks Boss is referring to the exchange rate, says brightly): 80 and rising! We aren’t stopping there, Netaji! Some actually predict touching 81 by end of September!

N (red with anger): What? Arre, these opponents of mine are now getting personal. Did they say that aloud on those TV shows?

CG (puzzled): Well, it’s all over the place, Netaji! Newspapers, radio, TV, social media. You name it, and it’s there!

N (suddenly indignant): Really, these fellows are totally out of control. But what I still cannot fathom is how I managed to breach 80! Is it oil?

CG (with admiration): Absolutely! You have hit the nail on its head. It finally comes down to oil, doesn’t it? As Putin invaded Russia, he created a huge commodity price hike on top of supply chains that were not yet fully functional after Covid. The surge in commodity prices has led to broad-basing of inflation in the US and the EU. The Fed has been showing pretty sharp response. It hiked the base rate by 75 bps in June, and Powell has been talking about another 75 bps in July again and possibly another 50 bps in September. That has got the investors jittery and they are moving out of non-dollar denominated investments — Asian stocks and bonds — into the dollar. And while you might be fretting about breaching 80, remember that we are still doing well due to all those measures being taken, right?

N (swelling up with pride): Arre Guptaji, I didn’t know you have noticed the new set of measures! It involved spending fair amount of money, Guptaji! But then, anything to rein it in at 80!

CG (with further admiration): I must say, Netaji, you are top of things today morning! Yes, the RBI has spent fair amount of money — $50 billion to be precise — to support the rupee. That’s why we are doing so much better than most of our Asian counterparts. Many of the South East Asian economies have been behind the curve in terms of adjusting their policy rates and their currencies show depreciation as well as volatility — South Korea, the Philippines and Taiwan are in deeper trouble than you, Sir!

Netaji (musingly, to himself): I didn’t know these South Asian netas have been battling obesity — that Taiwanese fellow who had come visiting last week seemed positively underfed! (Loudly, to CG): I always thought the Asians were lean, you know! I mean they don’t really seem to have so much of excess, ummm, reserves!

CG (earnestly): Oh no, Netaji! On the contrary, all emerging markets (EMs) have been very sensitive about maintaining an adequate reserve cover over the past decade. The Global Financial Crisis 2008, the taper tantrum 2013 and the Covid pandemic have all had one common implication — you need reserves to survive external shocks!

Netaji (looking affectionately at his reflection): Quite right, that!

CG (carrying on): So, once the liquidity conditions started easing up in 2020, the EMs built up good amount of reserves. And whilst there is volatility just now, that initial reserve position will help EMs to support the currencies over the next 6 months. Of course, one cannot quite predict how and when outflows will play out – see how investors ditched the Thai Baht last month!

Netaji (darkly): Don’t even mention the bhaat — I have also ditched it for three days now. My dietician goes on and on about how bhaat — rice! — is bad for my middle.

CG (stunned): Oh my God, have you simply been talking about your weight at 80 kg, Netaji?

Netaji (puzzled): Of course! What did you think?

CG (groaning to himself): Why did I even try a conversation with the man? Thinking that the Baht is bhaat — preposterous! Well, he totally needs to ‘Ringitt’ in!

The writer is a brave economist trying to laugh against the odds