The Persian Gulf War and the Indian Rupee

Sept 1990 and Bush Senior declared war on Iraq. Oil prices suddenly went up. Rajiv Gandhi was the Indian PM then. In order to avoid popular discontent at home, he had approached commercial banks in the US for short term loans instead of the IMF. India was under a $60 billion debt to a few large private commercial banks. With oil prices soaring high and India's limited forex, all of a sudden the nation's credit rating plummeted. Guess what, short term loans can be withdrawn at the end of every 6 months. After the Latin American debt crisis, this time around, the banks wanted their money fast. India paid. The country of something less than a billion was left with resources that could buy just a few weeks worth of essential imports. The IMF offered aid, but the Rupee had to be devalued and economic controls relaxed. The rest, as they say, is history.

Things around the globe impact our personal lives in weird ways.

Positive change needs a crisis to happen.