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US Debt Ceiling Crisis
News: The US government may soon stare at defaulting on its borrowings if the Congress doesn’t raise the nation’s debt ceiling.
What is Debt Ceiling?
The debt ceiling, or debt limit, is the total amount the US government is allowed to borrow to finance its expenditure, such as paying salaries and welfare allowances.
Currently, this limit is at $31.4 trillion. The Republicans, who have a majority in the House, are refusing to raise it unless the Democrat-run government agrees to their demands, which include a significant cut in spending.
What are the consequences of US defaulting on its borrowings?
Experts say the dollar would weaken, the stock markets would collapse, and millions might lose their jobs.
The US’s credit rating would be downgraded, making future borrowing more expensive.
How does it impact the Indian Rupee?
The rupee could slip further as there is more demand for the Dollar as the currency is considered safe haven which can withstand economic shocks and uncertainty.
Our imports will become expensive as Dollar gains strength.
Moreover, the US Fed will announce new interest rates. There has been 10 consecutive interest hikes in the past year.
Source – Indian Express, Moneycontrol and First Post
Address : 506, 3rd EYE THREE (III), Opp. Induben Khakhrawala, Girish Cold Drink Cross Road, CG Road, Navrangpura, Ahmedabad, 380009.
Mobile : 8469231587 / 9586028957
Telephone : 079-40098991
E-mail: dics.upsc@gmail.com
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