WhatsApp No. 88986-30000 · abrupt outflow of funds, according to banking industry and government...

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1. Besides face cover, should I wear gloves when I go outdoors? Relevant for GS Prelims & Mains Paper III; Science & Technology

Initially, masks were said to be not necessary unless you were a COVID-19 patient, a healthcare worker or someone cleaning an environment that may have had such patients in them. Now that health authorities in India, as well as the US, have recommended that everyone going out should use a face cover, does that work for gloves too? No, the previous advisory stands. What is the recommendation on wearing gloves?

Gloves are necessary for COVID-19 patients and healthcare workers; there is still no recommendation that the general public should wear them. A member of a medical team wears gloves because there is a constant risk of touching infected surfaces and spreading the infection to the next surface they touch. For that reason, they change their disposable gloves periodically. For someone who lives and works in an area without a history of COVID-19 infection, the risk of touching an infected surface is much lower. If they wish to wear gloves, the argument would be that this protect their hands from getting infected. The counter-argument would be that if they did touch an infected surface outdoors, they can spread it through their gloves now. That would include infecting themselves. If they handled something infected and then touched their face, the gloves would not protect them. Gloves can do more harm

If someone outside of healthcare wears gloves, some experts have observed, he or she might become less conscious that they contaminated their hands than they might have if they had touched a surface with their bare hands. As such, there is no substitute for hand hygiene — wash your hands frequently with soap and water, or with an alcohol-based sanitiser. Only when washing or sanitising is not an option should one look at gloves as a possible way to minimise infection. Source: The Indian Express

2. How a dollar swap line with US Fed can help in uncertain times Relevant for GS Prelims & Mains Paper II; IOBR

India is working with the United States to secure a dollar swap line that would help in better management of its external account and provide extra cushion in the event of an abrupt outflow of funds, according to banking industry and government sources.

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India already has a $75 billion bilateral currency swap line with Japan, which has the second highest dollar reserves after China. The Reserve Bank of India also offers similar swap lines to central banks in the SAARC region within a total corpus of $2 billion. What are the benefits of a swap line?

While India is largely expected to tide over any challenge posed by continued outflows of funds from the markets, a swap line with the US Federal Reserve provides additional comfort to the forex markets. Foreign institutional investors (FIIs) have been large sellers in the Indian equity and debt markets in March and April so far, as concerns over the economic effects of the COVID-19 pandemic has hit investor sentiment. Even as the stock markets have seen a pullback from earlier low levels, there is apprehension that the economic impact of COVID-19 will last for a significant length of time, and there is unlikely to be any V-shaped recovery in the economy or in the financial markets. This means that the government and the RBI cannot lower their guard on the management of the economy and the external account.

Are India’s foreign exchange reserves enough? In roughly a month, India’s foreign exchange reserves have fallen by nearly $13 billion — from an all-time high of $487.23 billion on March 6 to $474.66 billion as on April 3, as per the latest data reported by the RBI. Despite the slump in global crude oil prices and reduction in imports due to the pandemic outbreak, a sharp outflow of funds resulting from foreign portfolio investors (FPIs) looking for safer havens amidst the current global uncertainty, has pulled down India’s foreign exchange reserves. After a smooth run during which India’s foreign exchange reserves rose week-on-week for nearly six months, they started to decline in March. FPIs invested a net of Rs 58,337 crore, or nearly $8 billion, between September 2019 and February 2020. According to RBI data, 63.7% of India’s foreign currency assets — or $256.17 billion — are held in overseas securities, mainly in the US treasury. Some forex market participants believe that the country’s reserves at this stage — which are roughly equivalent to 12 months of import requirements — are sufficient to tide over any difficulty. How does a swap facility work?

In a swap arrangement, the US Fed provides dollars to a foreign central bank, which, at the same time, provides the equivalent funds in its currency to the Fed, based on the market exchange rate at the time of the transaction. The parties agree to swap back these quantities of their two currencies at a specified date in the future, which could be the next day or even three months later, using the same exchange rate as in the first transaction.








These swap operations carry no exchange rate or other market risks, as transaction terms are set in advance. The absence of an exchange rate risk is the major benefit of such a facility.

Does India have a swap line with any other country?

In 2019, India signed a $75 billion bilateral currency swap line agreement with Japan, which has the second largest dollar reserves after China. This facility provides India with the flexibility to use these reserves at any time in order to maintain an appropriate level of balance of payments or short-term liquidity. Last November, to further financial stability and economic cooperation within the SAARC region, the RBI put in place a revised framework on currency swap arrangement for SAARC countries for 2019-22. This facility originally came into operation on November 15, 2012 to provide a backstop line of funding for short-term foreign exchange liquidity requirements or balance of payment crises until longer term arrangements were made. Under the framework for 2019-22, RBI will continue to offer a swap arrangement within the overall corpus of $2 billion. Other countries can withdraw funds in the US dollar, the euro, or the Indian rupee.

With which countries does the US have swap lines?

On March 19, 2020, the Fed opened temporary swap arrangements with the central banks of Australia, Brazil, Denmark, South Korea, Mexico, Norway, New Zealand, Singapore, and Sweden, to be in place for at least six months for a combined $450 billion. The Fed already has permanent swap arrangements with the Bank of Canada, the Bank of England, the European Central Bank, the Bank of Japan, and the Swiss National Bank. Other large economies including India, China, Russia, Saudi Arabia and South Africa — all part of the G-20 grouping — currently do not have a currency swap line with the US.

Source: The Indian Express

3. Why ‘false negative’ coronavirus tests are a concern Relevant for GS Prelims & Mains Paper III; Science & Technology

What are false negatives?

There has been concern about the manner in which some COVID-19 patients have apparently relapsed. Only days after testing negative, they have been confirmed positive a second time. In Pune, a woman in her sixties tested negative, then fell critically ill with the infection three or four days later, and subsequently died.








Are these fresh infections? Doctors do not rule out the possibility that these patients had not rid themselves of the virus in the first place, but the virus didn’t show up in the tests. This is called “false negative”. Coronavirus (COVID-19) ‘false negative’ tests: Why it happens

No lab test is 100% accurate. The tests based on detection of genetic material are very sensitive, but yes sometimes are negative. It can be because the swab was not taken right or the test was run badly, or sometimes simply because the virus may shed in different amounts, and was not there in the nose at that time. If the infection is in the lung, then a nose swab may not detect it. To be confirmed negative after being positive… you normally need two negative swabs 24 hours apart to be sure. False security

In a special article in Mayo Clinic Proceedings, experts have flagged another concern — the risk that over-reliance on COVID-19 testing can pose to clinical and public health decisions. A negative test often does not mean the person does not have the disease, and test results need to be considered in the context of patient characteristics and exposure. The authors stress it’s important for public health officials to stick to principles of evidence-based reasoning regarding diagnostic test results and false-negatives. Source: The Indian Express

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WhatsApp No. 88986-30000 · abrupt outflow of funds, according to banking industry and government...

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