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Fall of the rupee worrisome
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Bikky Khosla | 22 Nov, 2011
The rupee fell to 52.15 against the US dollar on Monday. On the surface, the news looks good for exporters and bad for importers. But at this moment, the situation is not as simple as that. The abrupt dive the rupee has taken may result in many dire consequences, which will be good for none, for many reasons.
First of all, the rupee's slump has come at a bad time. The economy is reeling under high inflation, which the RBI is trying to tame down by raising interest rates, but with little success. As a result, the Indian industry has to carry the burden of high costs of borrowing and inputs.
India imports around 70 percent of its total oil requirement. With every one rupee fall against the US dollar the Indian oil industry losing Rs. 8000 crore on annual basis if the prices are not raised, the weak rupee may soon result in fuel price hike, which will in turn further increase inflationary pressure in the economy, also making it difficult for the RBI to exit from its tight monetary stance.
In addition, the rupee crash is likely to result in higher fiscal deficit, which is already at a concerning level and likely to exceed 4.6 percent of the GDP target in the current fiscal. Another concern is that if the rupee remains weak for a long period, foreign investors and creditors will lose confidence in our economy. Already there is a 23 percent fall in investment by Foreign Institutional Investors (FIIs) since May end. Now the rupee fall may further worsen the situation.
The rupee plunge may also affect our companies that have taken foreign loans. Since the beginning of this year, Indian companies have borrowed close to $29 billion in foreign currencies. If the current currency valuations persist, the cost of repaying these foreign loans will be higher by a whopping amount.
As far exporters' benefit is concerned, the rupee fall will get them more rupees for the same price in dollars but those who have hedged their exposure at lower levels will see only limited gains. Also, the high costs of raw materials and borrowing are there to mitigate their profits. Apart from these worries, the dried up global demand will also affect the exporters.
The bottom line: the rupee crash is another blow to the economy. It has hit at a vulnerable moment. If the rupee's weakness persists for a long period, the economy will certainly be closer to a bigger problem. It is responsibility of none but the government to prevent such a possibility.
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World is very close to monetary collapse
Peter Palms | Wed Dec 21 21:18:36 2011
If all the fiat money that has been printed, which in the U.S. are called federal reserve noted, were redeemed for a new silver and gold backed dollar, it would take $216 federal reserve notes to buy one new silver dollar. The globe is very close to an monetary collapse.
Worried about the fall of Rupee
ram | Tue Nov 29 16:56:08 2011
Restrict import from China.
Surprising - how RBI is thinking
Prem Madan | Fri Nov 25 19:18:09 2011
Yes it is worrisome. It is surprising, how the RBI is thinking? 1. The inflation can come only by increasing production in the long run. 2. while all of us in management and production should concentrate on finding ways to increase production, all RBI actions are away from it. it is only concentrating on increasing interest,reducing money instead of using money on productive incentives. 4. Think As a production unit am I comfortable in investing for production when the interest is so high, banks are aggressive and the scenario is uncomfortable. 5. How to reduce price, the cost of raw materials is more, manpower cost is high, labor is expansive,utilities are more,travel is exorbitant. 6. How a farmer will produce more unless we provide him with more water, better irrigated land,quick communication to move product, fertilizers on time and a commitment to lift produce.Today increasing cost has only made him poor and taken away whatever resources he had. Cost of living is more to him as to all of us. 7. How a poor vendor on street will sell cheap,if interest is high,his survival is expansive,his transport and other expanses have gone up several times.His purchase value has become uncertain. 8. The big players have affected his operation by taking over bulk produce at competitive prices and he is left to survive on his own,without increasing production. 9. Please think this is bad economy,production needs to be supported at all costs,by RBI and all concerned at any cost.
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Re: Surprising - how RBI is thinking
manoharkantak | Mon Nov 28 01:31:12 2011
Neither RBI nor Government is bothered about production and economy. They are only interested in safeguarding their chairs. This job has to be entrusted to people loyal to the nation and those who are capable to take and implement unconventional decisions. The present people do not know how to solve this problem as such they will make the things worse. Wait and watch.
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Restrict import from China
Radhan | Thu Nov 24 14:47:01 2011
First of all we must produce products for our own use and restrict import from China
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Re: Restrict import from China
Narasimhulu | Thu Dec 1 04:26:43 2011
YES, if we want rupee has to be raise, we need to reduce import of products from other countries.
Of course our mahatma said and took a movement to stop using other countries products, produce products ourselves and use it. Try to produce products which will be utilized by other countries will strengthen our countries economy.
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Worried about the fall of Rupee
A Rashid | Thu Nov 24 10:16:21 2011
As an NRI I am really sad and worried about the fall of Rupee. I personally believe all the blame lies upon Reserve Bank of India. Its policy is very conservative indeed.
Rupee Fall
Sunil Gupta | Thu Nov 24 02:37:04 2011
Sir, you discuss the fall out of the decline in the value of the Rupee but what is the cause?
Is it demand for Dollars by Indians?
Is it higher Imports?
Is it repatriation of Funds by FII's?
Sir, this is only because of the GREED of the Politicians. Because of the uneasiness in the Congress, the Politicians are repatriating their funds through the FIIs and the Reserve Bank is having its pound of flesh by not intervening in the market. Ultimately Indian Public becomes poorer.
Can you please comment?
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Re: Rupee Fall
G Narayanan Nair | Thu Nov 24 04:57:14 2011
I
think this is right time to bring back all Swiss bank a/c black money to India, then this condition may reverse. Pay to politician to happen the above thing.
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rupee fall
Allan Dsouza | Thu Nov 24 01:45:06 2011
many sad side effects...higher oil import bill, higher foreign debt servicing, etc.
Fall of The Rupee
Peter Palms PH.D | Wed Nov 23 20:15:20 2011
The collapse is global as it is intended to be. Government are very powerful and competent. But they do not represent their constituents. Monetary Policy is much more powerful than mega-tones of atomic energy.
Weakening rupee
Karan Bagatia | Wed Nov 23 19:04:32 2011
Completely disagree. Rupee is free falling in a free market for forex. You can't keep introducing control over every aspect - there are billions of aspects to consider. Capitalism entails freedom to trade, not control over it. Who asked these so called 'global companies' to over leverage their businesses with foreign loans in the first place? If they did so, they should've understood the risks first. Every time we suffer on account of our decisions, we go crying to the government, bickering about its policies. We want american roads, German cars and a French lifestyle, but don't want to pay for it. Why don't we post articles asking these cos to pay their taxes on time? Or better, invest their foreign borrowings into export based, viable businesses? Isn't that why foreign funds are brought into the country in the first place?
Rupee weakening
Peter Palms PH.D | Wed Nov 23 18:28:57 2011
read the fifth edition published September 2010 of "The Creature from Jekyll Island"
which describes the present debt of USA at $202 trillion. It would require exchanging 216 Federal reserve notes with One (1) new gold and silver backed to reverse the upcoming Global Economic Collapse of 2012-2013
You can expect Gold to soar, oil price s to become denominated in Ruble and Yuan new gold backed currencies, hyper inflation,
For more details go to http://peterPalms.com just beneath the text "MATTERS OF GREAT PUBLIC INTEREST" for 8 one hour free videos describing this reoccurring collapse of central banking systems every 250 years and the inflation caused by such systems and by fractional banking.
Those who are part of the 1% ruling class of the planet have no desire or intention to correcting this system, which is making them absolute rulers of a forth coming New World order consisting of a global government. In the USA this has already achieve that 1% of the population earns 50% of the total National income. Check Google for data on the gradual elimination of the middle class
The "Occupy Wall Street" phenomena are the first steps in an awakening public which does not really understand monetary policy or that Extreme Capitalism has extinguished Democracy in a corrupt Republic
Rupee Fall?
PM Menon | Wed Nov 23 17:34:48 2011
Is this a "fall of the rupee or truth staring in the face? how long can the Govt pretend to be taking action when all that has happened since independence is treating the symptoms and not the disease/ The disease is well known and is in the politics. One quick fix maybe to get the millions stashed in Swiss banks and actually let the Swiss also face reality? But alas which politician would want his Swiss cake taken away? Finally truth will prevail. Rupee has to find its own level.
Re Oil prices how do our politicos pretend that we can control it? Maybe we can. clear up the roads have better transport efficiency, boost Nuclear/ Hydel/ Thermal power? Why is it that oil discoveries happen only when private operators take up field exploration? Surely this oil and gas was there and is not natures creation in the last 5-10 yrs? Again who will forsake the imported Oil kickbacks? Not much hope.
Competitive India
Jim | Wed Nov 23 16:33:22 2011
This is not bad news. India will be even more competitive. Foreign investors will pile in for good value. Its needed when markets elsewhere are weak so do not be tempted view it through a nationalist lens.
rupee falling badly
sandeep | Wed Nov 23 15:00:57 2011
What its going on in 7 months it is nearly 25% crash in rupee? What India's experts are doing? What RBI is doing? please check it
Totally a mess up by the team of Dr Manmohan Singh
Ajay Angre | Wed Nov 23 14:48:49 2011
This is totally a mess up by the team of Dr Manmohan Singh. It is a mismanaged show and I am not saying this just to discredit this government but if you think of the policies of this government from 1992, you will realize this was bound to happen. Because by opening up our markets for foreign players, our local industry which that time was coming up, was finished by this government policies. The free market policy opened up the doors for international brands and against those giants, our small scale industry which was struggling to grow, could not face this ruthless competition with international brands. If we had to open up the markets for foreign brands, we also should have build our local industry like China, Japan and Germany did in the last 60 years. With lack of vision, vested interests, corruption in the government, what we got was a screw driver technology form foreign investors. Today, if China is strong, it is only because of its own industries and huge exports. I remember, then Finance minister P.Chidambaram saying, I don't care about exports when textile industry was facing huge competition from other international players like Bangladesh, Pakistan and China. He claimed with his typical rudeness, I have enough foreign exchange reserve. Killing our own small scale industries was the blunder Dr Manmohan Singh made. Not promoting exports of our own Indian goods was a big blunder. Today we are heading for trouble because of lack of vision of these so called experts
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Re: Totally a mess up by the team of Dr Manmohan Singh
manoharkantak | Mon Nov 28 01:41:41 2011
Dr.Manmohan Singh is more interested in pleasing foreigners even if it is at the cost of National interest. He is qualified and licensed to do that. Now India may be taken over by some other country, he is a Gandhian if somebody slaps on one cheek give him another cheek. So that should not surprise us. We were slaves and will be slaves again, history repeats. Situation is heading towards it.
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The Reality
Vikas | Wed Nov 23 13:13:05 2011
Its not the Rs which is falling. I
would like to draw your attention towards the role of Montek Singh
Ahluwalia, Shashi Tharoor and alike persons' concerns towards their
role in making it happening only then after we will get any proper
cause of our economy as we have seen the western countries have be
hit worse these days and all their big bosses are trying to get all
possible remedies via any channel either it may effect any country
which never will be concern for them . I will like to invite for
discussion on the following points if u can think it suitable 1- The
issue discussed and agreement by our prominent ministers and prime
minister during their foreign tour . 2- Decision taken by those
person employed through our constitutional procedure previously
employed with international bodies like IMF, WHO,WORLD BANK and alike
institution 3-- Role of market research agencies in collecting and
providing information should be deeply verified as they are fatal
like the brother of Ravan ie Bivishan, 4 Detail discussion on the
report submitted by the pay revision committee so it should be
established what are the point they take into account while making
their recommendation and what are the forces working to influence
their report. There are some more points which I will like to discuss
if found it reach the suitable hands. Thanking you regards
The reasons / causes behind this fall.
Shailesh Nadkarni | Wed Nov 23 11:50:20 2011
Your analysis is quite impressive and educative, but I fail to understand the mechanism and reasons that initiated this phenomena. Please elaborate, if possible.
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Re: The reasons / causes behind this fall.
Bikky | Sat Nov 26 07:59:43 2011
If you see the Oct figures of exports and imports ,imports are about 20 billion more then exports
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Still lives with hopes
Sachin | Wed Nov 23 11:46:28 2011
This may term as a hard time for India as rupee value is depreciating but I think its just due to global volatility in market. We,ll be able to tackle the situation as soon as the European economy will settle their own crisis. Taking any impatient action may lead to severe actionas we have already loosing confidence of the foreign investors.
Rupee going weak
Kolavennu K K Chand | Wed Nov 23 08:14:15 2011
This is the first time ever rupee had become this weak i.e. it touched 52.76/$. That to very swift within 7 months time. Particularly from 50 to 52.3/$ in just one week. This is not at all a good sign for India with the owes of inflation, high interest rates, FIIs withdrawal from our markets and the global recession scenario. One of the ways to correct this effect is to reduce as much as imports, increase exports, increase domestic demand and reduce expenditure. Oil imports is one major concern and India should improve in this sector. That is reduce oil consumption by improving technology, avoid wastage and to go for alternative fuels and renewable energy to reduce our oil consumption. Our automobile users should adopt to pooling of cars and use per car/ per vehicle should go up. Should improve public awareness on the oil cost vis a vis its value.
India not MANAGED well
Prof. Sitesh Dutt | Wed Nov 23 06:10:50 2011
Wake-up call for India's planners (have they been sleeping?). India is not being MANAGED well.Ministers need to be replaced by Managers who understand rudimentary Management principles like accountability and planning for tackling "what-if" situations like professional Safety managers.Time for fun and games is over!
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Re: India not MANAGED well
Peter Henninger | Wed Nov 30 08:15:49 2011
As Prof. Sitesh Dutt rightly says,"India is not being MANAGED well". As A European business man traveling frequently in India I can only say, there is not enough export in the first place and there is too much corruption in the second place. Indians are very talented and could easily become excellent MANAGERS operating their nation successfully into a brighter future with a stable Rupee and less inflation. The building industry is a big bubble of hot air which will burst next.
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Invite the best public brains
N.B.LALL | Wed Nov 23 06:01:35 2011
All can understand the concern of the responsible Indian fraternity of industrial development and over all long term balancing of Economy to lead the World to happy times ever.
However raising of the dust started in early 1970's when world economies faced acute recession and had to dump goods in the sea to stop steep fall in prices. Later the controlling governments resorted to inventing 'Plastic' money and allowed major financial institutions to issue this magic wand to public with full force and advertise its use to enjoy life without a bother. The system was new and shockingly surprising and didn't allow people to notice the 'frightening rider' it carried that its a loan, with unheard of interest rates! However time passed,till repayment time came.These nations with limited human resource resorted to engaging human resource to support the concerned in recovery of money en mass.That is when Indian and other skilled manpower started bringing money in hoards besides establishing electronic communication industry inland and abroad which had completely changed the face of the world.
We needed handling the uncontrolled inflow of money by the Government. Instead of utilizing the inflow our politics prevailed over the Economic and Industrial intelligence.
Today we need to invite the best public brains to harness our resources and develop infrastructure in agriculture; industry; education; science etc. to produce long demanded quality products world wide to add value to rupee.
Buy 'Made in India' goods
Sunil Chohan | Wed Nov 23 05:19:25 2011
You are trying to cause panic where one is not warranted.The market will correct itself and our goods will be more competitive. Our former President Abdul Kalam keeps saying why do we not buy goods produced in India and prefer imported ones? Once most of us start buying products made in India, then we not have major problems. Foreign goods are sucking away our hard earned foreign money that some of our companies are earning.
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Re: Buy 'Made in India' goods
KULKARNI D B | Thu Nov 24 05:38:05 2011
I agree with you.
These people are spreading panic.
India is flooded with goods imported from China mainly consumer items. Let these things become costlier. Now Indian industries will get a chance to produce and MNCs located in India shall try to use parts made in India, which they are importing presently. This will revive Indian industry in consumer, machinery and infrastructure sectors and earn good profits in exports, can also reduce export prices making it more competitive in international market.
LET OUR RUPEE TUMBLE MORE AND MORE.
NEVER PANIC
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How should we deal with?
Raju | Wed Nov 23 04:52:57 2011
How should we deal with this problem at this moment when we are facing all the problems at the same time?
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Re: How should we deal with?
R. A. Narayan | Wed Nov 23 10:22:50 2011
Stop worrying, start praying. I have always believed Indian Economy, Railways are always managed by GOD alone
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Reason for Rupee depreciation
Yogesh | Wed Nov 23 04:01:00 2011
Oversupply of rupee may be the key reason ,the supply of currency notes that are not in control of Govt may be the big reason for rupee depreciation and also the high inflatio.
Importers' concern
Ganesan | Wed Nov 23 03:49:22 2011
With the fixing of customs exchange rate based on USD/Re on a monthly basis Govt. earns additional amount while collecting the import duties, CVD, etc. Why not the Govt reduces the duty to regulate price increases
Is the Govt. really serious?
SV | Tue Nov 22 21:51:48 2011
I understand that it is the Government's responsibility to control the exchange value of the INR. But is the Govt. really serious about it? Are the leaders worried about the rate of inflation? Should the Govt. not take prompt measures to bring in all the black money lying in Swiss Bank accounts? And, there are other tax havens on the earth like cayman islands where also Indian money could be hidden. This Govt. is not going to do anything. Are we saying that the Govt. is running the country? My faith in existence of GOD ALMIGHTY multiplies in geometric progression when I see that this country is running still!!!! It is only HE who is running this country; the politicians are only running their own wishcarts.
Responsibility of the government
Vishal | Tue Nov 22 15:40:51 2011
I think it is the responsibility of the government to take care of all the plunges that rupee is taking into, also it seems that big bulls are now diversified to money hedging markets , so it is a kind of a game for a big bulls to play with the currencies( it is undoubtedly that they make a big money) , so there were the bull Runs in Sensex , then in MCX (gold,silver, copper, potato , toor dal) and it is time for USD .
The U.S.A himself is a debt ridden , and even they do trust their currency so much as we people do.
It HAPPENS ONLY IN INDIA "
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| Customs Exchange Rates |
| Currency |
Import |
Export |
US Dollar
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84.35
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82.60 |
UK Pound
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106.35
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102.90 |
Euro
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92.50
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89.35 |
| Japanese
Yen |
55.05 |
53.40 |
| As on 12 Oct, 2024 |
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