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Old 22nd August 2013, 12:12   #16
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A dollar becoming 64 Rs is not all bad. If we had a manufacturing industry in this country which exports we would be actually rejoicing about this. If I am an exporter and it costs me Rs. 64 to profitably sell an item & the dollar is 1$=Rs. 50, I would be selling it to my overseas importer at $1.28 per item. Now the dollar is 1$ = Rs. 64, I can offer the same item to him at $1 instead of $1.28. Since the item is cheaper for the buyer, they will buy more of it. And more people will buy from me. So instead of selling a total of Rs. 1000, I would be selling may be Rs. 1250 worth of stuff - i.e. my business has increased by 25%. China has been artificially devaluing their currency for years for this same purpose and US has been objecting to it all the time. For us, it's happening naturally - but we aren't happy about it we prefer a stronger currency so that our chest can swell with pride because our currency is stronger.

Unfortunately, since we don't manufacture much for exports, we aren't in a position to take advantage of this immediately. But I hope that the current dollar strength makes it attractive enough for entrepreneurs to setup more factories manufacturing for export in India.

Manufacturing is what will help us in the long run. Exporting some software coding is never going to achieve what we want to achieve as a country.

Last edited by carboy : 22nd August 2013 at 12:14.
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Old 22nd August 2013, 12:24   #17
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Default re: The Falling Indian Rupee

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A dollar becoming 64 Rs is not all bad. If we had a manufacturing industry in this country which exports we would be actually rejoicing about this. If I am an exporter and it costs me Rs. 64 to profitably sell an item & the dollar is 1$=Rs. 50, I would be selling it to my overseas importer at $1.28 per item. Now the dollar is 1$ = Rs. 64, I can offer the same item to him at $1 instead of $1.28. Since the item is cheaper for the buyer, they will buy more of it. And more people will buy from me. So instead of selling a total of Rs. 1000, I would be selling may be Rs. 1250 worth of stuff - i.e. my business has increased by 25%. China has been artificially devaluing their currency for years for this same purpose and US has been objecting to it all the time. For us, it's happening naturally - but we aren't happy about it we prefer a stronger currency so that our chest can swell with pride because our currency is stronger.

Unfortunately, since we don't manufacture much for exports, we aren't in a position to take advantage of this immediately. But I hope that the current dollar strength makes it attractive enough for entrepreneurs to setup more factories manufacturing for export in India.

Manufacturing is what will help us in the long run. Exporting some software coding is never going to achieve what we want to achieve as a country.
I remember, long time back Exports were exempt from Income tax. Then the exemption was withdrawn. I wonder why. Shouldn't the govt be encouraging exporters? If you earn Foreign exchange for the country, and buyer is abroad, why the need to pay tax in the country? I find it highly illogical that income from exports which brings in forex is taxed.
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Old 22nd August 2013, 12:32   #18
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Default re: The Falling Indian Rupee

Below video gives us a very good idea as to where we stand .Its from NDTV its a about an hour a very good eye opener .

http://www.ndtv.com/video/player/ndt...nomy/287650?hp

Last edited by ego4evr : 22nd August 2013 at 12:33. Reason: spelling
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Old 22nd August 2013, 12:39   #19
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Weak rupee is good for exports. But for our country where the imports are more and where deficit is raising, its not good.
Wonder what will happen when U.S Fed will stop their stimulus altogether. As its said, economies with weak fundamentals which cannot stand on their own will face serious consequences.

Also, we are trying to put lakhs of crores into unwanted schemes which could be used to produce something meaningful, jobs, exports etc. 2/3 of people will not have motivation to work hard, that should be cool for the economy.

Last edited by srishiva : 22nd August 2013 at 13:00.
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Old 22nd August 2013, 12:43   #20
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Default re: The Falling Indian Rupee



Here is a graph of the USD against the INR (as well as against some other currencies which have fallen). I am no expert here, but can anyone care to explain whether the same pessimism exists across economies of those countries?
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Old 22nd August 2013, 12:59   #21
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Ours is like a bad (and huge) case of credit card debt. Buying more (imports) than our ability to earn (exports), constantly in the red, trying to catch up (trade deficit).

Only way out of it: Buy less, earn more. Preferably a balanced combination of both. When it works for a regular Joe with a credit card, why can't we make it work for a nation? Before someone says it's not so simple, I agree it isn't. But it's not going to get any better by not trying. And from what I can see around me in layman terms, our policy makers aren't trying at all at any level (haven't done so in nearly a decade when we had the upper hand).
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Old 22nd August 2013, 17:17   #22
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Default Re: The Falling Indian Rupee

Here is my 2 cents.
The policies that are in place is to improve exports. Someone gave the example of retail. What was the government demanding? They wanted any company coming into India have local manufacturing as well. Not just import stuff from around the world and sell it here.
The same is the case for any foreign company wanting to invest in every sector in India. The Government is trying its best to open factories in India and increase manufacturing. In the long run this would most definitely lead to better exports from India. This way we reduce imports and increase exports. Very good plan in theory.
The issue is that the Foreign investors decided that they would not do that since they have to invest much more than they planned in India due to these policies (the foreign investors call them anti growth. I reserve my opinion).
But now this is resulting in falling Rupee, Increase in fuel costs etc. etc.
I feel it is a very delicate balance and the RBI is working hard for the benefit of the country in the long run.
My only fear is that, this being the election year. the government is going to put pressure on RBI to change its policy so it can show short term improvement.

P.S I am not a financial expert. This is just my opinion based on what I have read in the papers.
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Old 22nd August 2013, 17:23   #23
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Default Re: The Falling Indian Rupee

A possible solution to the currency crisis. Instead of exchanging rupee against the US$, exchange onions. Prices for both are the same against the US$, ie 1US$ fetches Rs. 64 and/or 1kg of onions.

http://www.theunrealtimes.com/2013/0...the-us-dollar/
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Old 22nd August 2013, 19:13   #24
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TSK's comments make a lot of sense!
--------------
The free market always catches up with everything, eventually. And you can't run an economy on FII money and money in stocks and bonds. That money flies away on the slightest hint of weakness.

Some things I've noticed:

We were once a nation mostly only exporting raw materials from our massive (and corrupt) mining industry. Now that the supreme court has shut down certain mines, the money has run dry there. Software exports really don't count, although they seem to be good at creating consumers here.

During the great housing bubble around 2007, prices shot up and people were spending lakhs to crores in loans to buy property. Remember debt is money? All that extra debt adds to the current supply and devalues the rupee.

Ever notice the size of the Rs.5 coin from 2000s to now? Or looked at the Rs.1 coin now? As the currency devalued, the govt. realized they shouldn't be putting so much metal into coins anymore so now you get steel plates with numbers on them instead of more valuable copper+nickel coins. Also note that the government makes money on every coin and note sold to banks, as their manufacturing cost seldom touches the face value of the currency. It's called Seigniorage. (With a devaluing currency they don't make much anymore so they have to resort to using cheaper materials).

An economy based on capitalism, debt and perpetual growth is never meant to be sustainable and has to crash at some point or other. Every currency in the history of the world has experienced rise in strength and a subsequent fall when they start debasing their currencies and the Indian Rupee is no different.

However, the number ONE problem plaguing India is the lack of a leader. A leader that will stand up to the world, speak up, help regain confidence in the nation, and motivate fellow citizens. Words can really make a difference, even to the markets. A nation led by a strong leader is a nation that is believed to be forging ahead.
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Old 22nd August 2013, 19:21   #25
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I think that we all can do our bit to improve the situation. We need to at least temporarily stop buying things that are to be bought by the supplier by paying dollars, for example imports from America. We need to put a check on luxury goods and services that are imported by paying in dollars. We need to switch to products which are made in India or at least from other countries such as Japan, Korea etc.

further we need to temporarily check our fuel usage as fuel has to be bought by paying dollars only. Fuel usage can be curtailed in many ways such as switching to public transport, carpool, fewer weekend trips etc.

The lust for gold needs a temporary break and the stock solid gold i.e., non ornamental gold stocked with the black money holders and normal Indian households should be pumped back into the market so that the import burden is reduced.

We should permanently stop using product of American companies such as colgate, pepsodent, coke, lays, mc donalds, subway, dove, lifebuoy, imported cigarettes, etc., etc., etc., which are the products of American companies as all these companies will take away their profits in dollars and not in rupees. In fact we can do this easily as these are not essential goods and services and there are so many Indian companies manufacturing alternative goods and services which are equally good or even better. But due to our mentality of getting carried away by the advertisements and the feeling of pride of using a international brand is the culprit.

So once we as common man of the country infuse some amount of patriotism in ourselves and adhere to some strict norms we can definitely contribute to the improvement of our economy.

There are so many other things that can be suggested by fellow bhpians and so many goods and services that can be named by the fellow bhpians.
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Old 22nd August 2013, 19:41   #26
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Originally Posted by patil View Post
I think that we all can do our bit to improve the situation. We need to at least temporarily stop buying things that are to be bought by the supplier by paying dollars, for example imports from America. We need to put a check on luxury goods and services that are imported by paying in dollars. We need to switch to products which are made in India or at least from other countries such as Japan, Korea etc.

further we need to temporarily check our fuel usage as fuel has to be bought by paying dollars only. Fuel usage can be curtailed in many ways such as switching to public transport, carpool, fewer weekend trips etc.

The lust for gold needs a temporary break and the stock solid gold i.e., non ornamental gold stocked with the black money holders and normal Indian households should be pumped back into the market so that the import burden is reduced.

We should permanently stop using product of American companies such as colgate, pepsodent, coke, lays, mc donalds, subway, dove, lifebuoy, imported cigarettes, etc., etc., etc., which are the products of American companies as all these companies will take away their profits in dollars and not in rupees. In fact we can do this easily as these are not essential goods and services and there are so many Indian companies manufacturing alternative goods and services which are equally good or even better. But due to our mentality of getting carried away by the advertisements and the feeling of pride of using a international brand is the culprit.

So once we as common man of the country infuse some amount of patriotism in ourselves and adhere to some strict norms we can definitely contribute to the improvement of our economy.

There are so many other things that can be suggested by fellow bhpians and so many goods and services that can be named by the fellow bhpians.
And we'll effectively be back in pre-90s

We need to bring back confidence of investors both domestic and abroad and I think we should begin with infrastructure of roads and railways which we all know are in dire straits. Infrastructure building should bring a lot of cash into the nation as builders scramble to build and profit from toll (build and transfer scheme), generate lakhs of jobs, save many thousands of liters of fuel wasted in bad roads and unnecessary driving due to lack of space on trains, move goods efficiently by rail so we can move away from our aging trucking infrastructure, and more. This is just one minor thing the govt. could start with. Imagine if all our minds were put together to build this nation back into prosperity !
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Old 22nd August 2013, 20:49   #27
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We need to switch to products which are made in India or at least from other countries such as Japan, Korea etc.
How will buying from Japan or Korea help?
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Old 22nd August 2013, 21:05   #28
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Don't know whether the statistics and logic are right. The article is very well written.

https://scripbox.com/blog/making-sen...-of-the-rupee/
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Old 22nd August 2013, 21:10   #29
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Originally Posted by patil View Post
I think that we all can do our bit to improve the situation. We need to at least temporarily stop buying things that are to be bought by the supplier by paying dollars, for example imports from America. We need to put a check on luxury goods and services that are imported by paying in dollars. We need to switch to products which are made in India or at least from other countries such as Japan, Korea etc.
Patriotism is good to have. Green back is the global currency. Stopping to use American products does not save dollars as we will have to pay the equivalent in dollar for another country as well. We pay in dollars for oil in Iraq. we pay in dollars for 99% of our imports. Not all of them are neccesarily American.
Self reliance can help a longway in securing the economy. This is what happened to the technical sector during the American sanctions due to nuclear test. But the issue now is most of the money we have as foreign exchange is not by exports, but by investment by FII. This is the root cause of evil. If we can have a trade balance, it will help rupee appreciate. It is high time to have incentives or tax breaks for exporting business.
There are talks about issuing soverign bonds, but that will just postpone the problem, dont eradicate it. If we can get into some deals like a barter system for oil, that will help us a lot than preventing people from importing TV.
I think India tried the barter system with Iran when they were hard pressed for food grains. It was very pofitable for us as we could negate the dollar fluctuation in the market. I think big brother made us to stop that as well.

We are missing a charismatic leader. If that happens, half of our problems will vanish. But then again smart people dont get to politics.

Also since we are in a motoring forum, addiction to CKD cars is also not good for economy compared to the desi ones. But then, we dont have much options when we compare quality.

Last edited by 999 : 22nd August 2013 at 21:15.
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Old 22nd August 2013, 21:11   #30
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Has this got something to do with the oil import? If we compare the exchanges rates for the last couple of years and map that against the oil imports, whenever the oil import came down, the exchange rates came down as well and vice versa. So the question for me is why do we then import crude oil to those levels that would actually de-value the rupee so drastically?
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