The falling rupee
We need to discuss and suggest to Government what should be done to ensure rupee doesnt slide to 75 by 2019 elections. This is a very big problem for not just businesses who import products/services but for common people who will see significant rise in cost of living as petrol/diesel/commodities everything will go up. According to me the reasons are four external ones outlined by Govt economists but our internal deficit management, RBI dollar strategy buying etc.
Four external reasons why rupee is falling
First, the collapse of Turkish lira and its cascading impact on European banks threatens to become a contagion. Emerging markets felt the tremours as domestic assets in these countries sold off and currency repatriation followed. Argentina panicked and hiked rates sharply.
Second, crude prices first rose sharply and have been consolidating at higher levels for many months now. Oil companies, therefore, have been buying more dollars than they would normally have.
Third, US rate hikes and prospects of further hikes have been exerting pressure on domestic debt markets as foreign investors look to exit this category of the asset class.
Fourth, the trade war between the US and its major trading partners is turning out to have a secondary effect among emerging markets via currency weakness and protectionist reactions. more
Four external reasons why rupee is falling
First, the collapse of Turkish lira and its cascading impact on European banks threatens to become a contagion. Emerging markets felt the tremours as domestic assets in these countries sold off and currency repatriation followed. Argentina panicked and hiked rates sharply.
Second, crude prices first rose sharply and have been consolidating at higher levels for many months now. Oil companies, therefore, have been buying more dollars than they would normally have.
Third, US rate hikes and prospects of further hikes have been exerting pressure on domestic debt markets as foreign investors look to exit this category of the asset class.
Fourth, the trade war between the US and its major trading partners is turning out to have a secondary effect among emerging markets via currency weakness and protectionist reactions. more
Viewed by 2628
View all 44 comments Below 44 comments
Our value of money should not go on decreasing. Let the government prepare road map for recovery of the rate. more
Sep 05
Modi needs to do what Trump is doing for the US. Oil is our major outgo of foreign currency. Our industrial strength is a pittance and so is exports in relation to what it should /could be. India's main strength in terms of international economic engagement is its massive middle class, with considerable buying power, which will be substantially enhanced by good agricultural output based on the current monsoon (unless the govt rapes the farmers again). 1. If PM can demonetize the whole economy , "whatever be the cost", he can most certainly limit imports of oil; So what if we lose another few percentage points GDP ! Ban imports. Buy on barter terms. Think Iran. Limit consumption locally. Diversify energy sources ASAP. 2. Regulate foreign business entry into India to their investment and employment generation committment in India. 3. Peg semi-fix the Rupee to the US Dollar. WE NEED A STRONG RUPEE ! STOP CRYING ABOUT EXPORTS !!! WE WILL NEVER BE A MAJORLY EXPORTING ECONOMY. SO ENURE CHEAP IMPORTS BY CURRENCY APPRECIATION. more
Aug 30
Unless we become positive of exporter-importer , the trained can never reverse, and our lake of technological development, and finally technological slavery in day to day items is basic reason for this. more
Aug 28
