An Accountant Writes
Vol 1, Issue 6 | June 2026
CA Nithya Aravindakshan
From the Editor's Desk
Last month, our Prime Minister made an appeal to curb foreign vacations, to show restraint in buying gold, and to adopt austerity measures such as carpooling and WFH where possible to reduce fuel usage. When the prime minister of the world's fifth-largest economy makes a direct appeal via a special broadcast, it usually means the situation is grave. Sudden broadcasts appealing for WFH brought back fears of another lockdown — the Covid-era challenges still fresh in public memory. Not just the markets, even ordinary households understood that the war bill had arrived.
LPG supplies were already facing a crunch due to the Hormuz standoff and were being rationed. Petrol prices had so far remained stable because the country was drawing upon its buffer stock. But with this announcement, it became clear that this stability would not last for long, and that petrol prices would soon begin to rise.
Petrol price rises do not remain confined to the fuel station. They travel quietly through the economy — into freight bills, into mandi prices, into the cost of vegetables, milk, packaged goods, and daily essentials, until they finally arrive in the household budget as inflation. This is not coincidence; it is mechanism. In my first article this edition, I trace exactly how oil price fluctuations become the inflation that lands in your grocery bag.
This crisis has also pushed the term petrodollar into daily conversation — repeated by news anchors and war strategists alike, often with very little explanation. It is not mere jargon. The dollar's position at the centre of global trade was not accidental; it was negotiated into existence at Bretton Woods in 1944. In my second article, I trace how that agreement was made, why it eventually broke down, and what replaced it.
This month, we saw the rupee hit an all-time low of around Rs 96 to the dollar. That is not an isolated event. It is the natural consequence of high oil prices, foreign capital exit, and the visible boundaries of RBI's monetary tools. In my third article, I explore how the RBI attempts to stabilise the rupee — and why, sometimes, even prudent intervention cannot fully absorb an external shock.
India's forex reserves stood at USD 682 billion in the week ending May 29 — a number that sounds reassuring until you look inside it. Foreign currency assets, the more liquid component that actually defends the rupee in a crisis, have fallen USD 38 billion year-on-year. Gold reserves have risen to partly compensate. The cushion exists — but it is becoming less usable, precisely at the moment it may be needed most.
Food for Thought
We had no alliance in this war, no troops, no side. And yet the economy had no such luxury of neutrality. Petroleum accounts for roughly 30% of our merchandise imports, and gems and jewellery constitute around 15%. Petroleum moves everything — every truck, every factory, every kitchen. Gold in India is an investment, yes — but it is also a promise. Parents take loans to buy gold for a daughter's wedding. No price point changes that calculation. So, when the Prime Minister asks Indians to pause both fuel consumption and gold purchases, he is effectively asking for restraint in two areas where restraint is least available.
Despite the appeal, I suspect consumption will not decline sharply. In fact, announcements of scarcity often produce the opposite effect. A family with a wedding on the horizon is unlikely to postpone buying gold; it may rush to buy before prices climb further or supply tightens. Anticipation itself becomes a driver of demand.
Oil had touched USD 110 per barrel in April, and gold crossed Rs 1,50,000 for 10 grams. For a country that imports more than it exports — and buys its oil in a currency it does not print — what does this sustained pressure mean for our forex reserves? Are we watching the early signs of a liquidity crisis, or merely the cost of being globally connected?
And do we really understand the petrodollar — or has it become the perfect closing argument in every forex discussion: a term that makes the speaker sound informed, and ensures that nobody asks the next question?
