Indian Rupee depreciation against Dollar

sehwag1830

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You are talking about software exports. The same goes for the manufacturing costs and the exports.

Can anyone tell me, if the devalued rupee is as bad as it is made out, why was the rupee devalued during the reforms?
Devalued rupee is good if it results in trade surplus and Current account surplus. However if after a certain time of devalued currency, there is still trade deficit and CAD , then it bad.

So we hope due to devaluation of rupee our export increases and CAD decreases.
 

pmaitra

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Devalued rupee is good if it results in trade surplus and Current account surplus. However if after a certain time of devalued currency, there is still trade deficit and CAD , then it bad.

So we hope due to devaluation of rupee our export increases and CAD decreases.
India has a trade deficit with USA as well as PRC. We also import a lot of oil. How is a weak rupee helping India in that regard?
 

Godless-Kafir

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And one more shit I don't understand is, this grouping into: "you are a ----ing Congress supporter" or "you are a ----ing BJP troll". Assholism - that's what it is. Can't one look at issues and support or criticize based on issues?

There are some people on this forum like Galaxy and UTK who actually disagree with some reforms like FDI. Param disagrees with GST. So, it is fine if they support the BJP for opposing these things, because they believe that it needs to be opposed.

But if you support these reforms (and I think they are very necessary), and still sugarcoat the obstructionism, you should be called out for what you are.
Again it is not the Job of the opposition to agree even if that may have been their own policy! I am sure BJP would be the first to open the FDI on retail, just like they did on Disinvestment. Like the Republican party in US i have noticed in Jaitleys speech he reflects the same things like reducing the taxes for the rich etc.,

So i am pro BJP, if you want capitalism then you cant complain some people are Rich.
 

VIP

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I am no economist, but the most credible reason I have heard so far, for the rupee collapse, is that people are ditching the Euro due to Eurozone crisis stuff, and putting it back in the good ol' dollar. That is why the dollar is shooting up.
Dollar is not alone shooting up against Rupees.Euro, pound and yen also shooting up in top gear.
 

Bangalorean

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See suppose you work for TCS. And your annual salary is Rs 9 lakh.And you are paid in dollars, so you are exporting.

Now if 1$ = Rs 45, then company has to spend 20000 $ for the person.
And if 1$=Rs 50, then company has to spend 18000$ for the person.
So with weaker rupee, company has to spend lesser dollar , and so he is cheaper.
Huh - the only persons who benefit from the dollar appreciation are IT companies and NRIs, and a few sundry exporters. Even the exporters are facing renegotiation of contracts because you see, people who work in international trade are not dolts. In this unstable economic climate, they factor in such shit into their contracts, and most of them have a clause to renegotiate the contract if there are such fluctuations beyond a certain degree. And do the IT companies transfer the saving to the employee? Do the employees get increased spending or purchasing power?
 

Mad Indian

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Read my earlier statements.

Now, I will borrow your equations and add to it.

Now if 1$ = Rs 45, then company has to spend 20000 $ for the person.
And if 1$=Rs 50, then company has to spend 18000$ for the person.
And after one year if 1$=Rs 25, then company has to spend 36000$ for the person.
However, since the Rupee has deflated over a year, TCS will bill for half the amount it charged one year ago, therefore, 0.5$ = Rs.12.5, then the company has to spend 18000$. TCS does not lose any business, and the Rupee strengthens.

Good, question, I answered the same question from my friend some time back:)

Ah but the problem is, the rupee appreciation wrt dollar should be backed by deflation in the domestic market(.ie where the smaller salary is acceptable)>

But here, the rupee appreciation will not be followed by deflation. And hence the investor will be still forced to pay his original salary if not more. HEnce the appreciating rupee hurts the investors and exports
 

pmaitra

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Dollar is not alone shooting up against Rupees.Euro, pound and yen also shooting up in top gear.
Dollar is falling, but relative to Rupee it is rising, means Rupee is falling at a very dangerous rate.
 

Bangalorean

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Again it is not the Job of the opposition to agree even if that may have been their own policy! I am sure BJP would be the first to open the FDI on retail, just like they did on Disinvestment. Like the Republican party in US i have noticed in Jaitleys speech he reflects the same things like reducing the taxes for the rich etc.,

So i am pro BJP, if you want capitalism then you cant complain some people are Rich.
The BJP's economic agenda was always center-right, and strong pro-market. Things like FDI, nuke deal, disinvestment, etc. were things that the BJP always stood for. I would have appreciated and admired them if they had stuck to their convictions and supported the center during tough times, for the nation's sake.

The extra power that thoroughly useless parties like SP, and useless politicians like Mamata Bannerjee have, is precisely because of such political games. At the end of the day, the nation suffers.
 

Mad Indian

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Dollar is falling, but relative to Rupee it is rising, means Rupee is falling at a very dangerous rate.
And who do you think is responsible for it?:troll:

No it is not export lobby.
 

sehwag1830

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Read my earlier statements.

Now, I will borrow your equations and add to it.

Now if 1$ = Rs 45, then company has to spend 20000 $ for the person.
And if 1$=Rs 50, then company has to spend 18000$ for the person.
And after one year if 1$=Rs 25, then company has to spend 36000$ for the person.
However, since the Rupee has deflated over a year, TCS will bill for half the amount it charged one year ago, therefore, 0.5$ = Rs.12.5, then the company has to spend 18000$. TCS does not lose any business, and the Rupee strengthens.
Rupee strengthening:
Suppose 1$= Rs 45 last year, And 1$ =Rs 40 now. Here the rupee has strengthened as to get same amount of rupee you have to spend more dollar. And if you spend more dollar, the goods will be expensive for foreign company and he will buy less.

Rupee weakening
Suppose 1$= Rs 45 last year, And 1$ =Rs 50 now. Here the rupee has weakened as to get same amount of rupee you have to spend lesser dollar. And if you spend less dollar, the goods will be cheaper for foreign company and he will buy more.
 

Godless-Kafir

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Everyone was expecting the dollar to fall, I actually exported some stuff to Japan recently but the bank fixed my returns on 50Rs/Dollar as stop loss and they will honor my bill even if it goes down to 47Rs but it went to 57Rs. So for me i lost 7Rs on my sale, i dont understand what is happening here!!
 

VIP

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Dollar is falling, but relative to Rupee it is rising, means Rupee is falling at a very dangerous rate.
I know that.I was replying to him that euro, pound is also rising not alone dollar, so if eurozone is in crisis and still euro is increasing against rupee than rupee is falling very fast.
 

pmaitra

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Good, question, I answered the same question from my friend some time back:)
Thanks. Finally someone understands the sinister back-stage manipulations and can think beyond paper currency that is printed out of thin air.

Ah but the problem is, the rupee appreciation wrt dollar should be backed by deflation in the domestic market(.ie where the smaller salary is acceptable)>
True, and is that difficult to obtain? How about getting a salary and tax cut all across the board?

But here, the rupee appreciation will not be followed by deflation. And hence the investor will be still forced to pay his original salary if not more. HEnce the appreciating rupee hurts the investors and exports
No, if the Rupee deflates, then everything goes down. It is is sudden, it can be made statutory by law, otherwise, let the economy adjust as per the newer realities. So, if a 5 lb bag of rice today costs Rs. 100, next year it will cost say Rs. 90, similarly everything else will cost less. A Rs. 5 postage stamp will now cost Rs. 4.5, or a Rs. 8 lakh car will now cost Rs. 7.2 lakhs. How difficult is that?
 

Godless-Kafir

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The BJP's economic agenda was always center-right, and strong pro-market. Things like FDI, nuke deal, disinvestment, etc. were things that the BJP always stood for. I would have appreciated and admired them if they had stuck to their convictions and supported the center during tough times, for the nation's sake.

The extra power that thoroughly useless parties like SP, and useless politicians like Mamata Bannerjee have, is precisely because of such political games. At the end of the day, the nation suffers.
Dude, again if BJP agrees on all this what is the use? How does that help in passing the bill? They might as well ruin the week congress name but then it is a pity that the nation takes a hit.

I will agree the Speaker needs the right to throw people out if they abuse disciplinary rules and shout in the house.

Either way stay on Topic for fuk sake.
 
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sehwag1830

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India has a trade deficit with USA as well as PRC. We also import a lot of oil. How is a weak rupee helping India in that regard?
Nah we have a huge trade surplus with USA.

Our only hope is with weak rupee, our export will increae. If it doesn't ,then we are royally f**ked.
 

VIP

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The BJP's economic agenda was always center-right, and strong pro-market. Things like FDI, nuke deal, disinvestment, etc. were things that the BJP always stood for. I would have appreciated and admired them if they had stuck to their convictions and supported the center during tough times, for the nation's sake.

The extra power that thoroughly useless parties like SP, and useless politicians like Mamata Bannerjee have, is precisely because of such political games. At the end of the day, the nation suffers.

Well, you can oppose BJP for FDI issue but have you ever thought what would have congress done, if it was in opposition instead of BJP ??? You need to understand that BJP doesn't make ruckus like congress in each and every step.And that's the positive side of it.
 

pmaitra

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Rupee strengthening:
Suppose 1$= Rs 45 last year, And 1$ =Rs 40 now. Here the rupee has strengthened as to get same amount of rupee you have to spend more dollar. And if you spend more dollar, the goods will be expensive for foreign company and he will buy less.

Rupee weakening
Suppose 1$= Rs 45 last year, And 1$ =Rs 50 now. Here the rupee has weakened as to get same amount of rupee you have to spend lesser dollar. And if you spend less dollar, the goods will be cheaper for foreign company and he will buy more.
I agree and you are correct, absolutely correct.

Now would you please answer my question that is there in what you quoted?

Note: All your calculations are based on the Dollar and the Rupee, and both are unstable paper currencies, and both of them are inflating, albeit at different rates.
 

pmaitra

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Nah we have a huge trade surplus with USA.

Our only hope is with weak rupee, our export will increae. If it doesn't ,then we are royally f**ked.
Umm, no, but I know what you are getting at. Do include defense purchases of last year and compare. Tell me whether we still have a trade surplus.
 

Bangalorean

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Dude, again if BJP agrees on all this what is the use? How does that help in passing the bill? They might as well ruin the week congress name but then it is a pity that the nation takes a hit.

I will agree the Speaker needs the right to throw people out if they abuse disciplinary rules and shout in the house.

Either way stay on Topic for fuk sake.
Huh - you could have taken your own advise and not quoted my old post on the previous page. :crazy:
 

VIP

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Dude, again if BJP agrees on all this what is the use? How does that help in passing the bill? They might as well ruin the week congress name but then it is a pity that the nation takes a hit.

I will agree the Speaker needs the right to throw people out if they violet disciplinary rules.

Either way stay on Topic for fuk sake.
You should counter him by giving him congress' example for being in opposition, best example is Gujarat. Sale congressi MKL never want to pass good laws and always oppose every decision made, just try to ruin govt's image by using media or Governor.
 

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