Oil Surge and Fed Hike Test India’s Economy

Oil prices have gone up sharply, partly because fighting and control of Yemen’s Red Sea coast threaten an important shipping route.

The United States central bank may also raise interest rates.

Higher rates can make investors prefer safer investments in countries such as the United States, Japan, and the United Kingdom.

India imports a lot of energy and also needs money from foreign investors.

Expensive oil can make prices rise in India.

It can also make India’s trade gap larger.

So far, India has handled the energy shock relatively well.

Special foreign-currency deposits have helped support the Indian rupee.