for what reason rupee is falling

8/3/2019 FOR WHAT REASON RUPEE IS FALLING

1/17

Is it only demand and supply

well might be

In the case of falling

rupee.


2/17


3/17

Falling ruppee

Well here are some of the points It is t h e w ors t p e r f or min g c u r r e n cy in A s

t h e t h ir d w ors t p e r f or min g c u r r e n cy in t h (Then so what ) R e a s on s l ik e t h e glob a l c r is is a r e c om m on

c u r r e n c ie s a n d i t a f f e c ts t h e r u p e e a s w e


4/17

Well lets come to the point

well there is some of the india

internal probems as well

like

inflation.(which means how fastare we growing. Which again

means expenses are growing butresources are not growing to

fulfill those expenses.


5/17

well so inflation is one of the reason.

Sowhat rbi is doing to control thatinflation as we all know they are

increasing the intreset rates.what theuse (well more the interest rates morewill people want to deosit in an bank

account so ?people will spend lessutleast in present term -then?the

prices could be controlled -how?


6/17

Because when there is less demand in the marketprices will slowly slowly come down .

Why?Because when there is no demand there will be so

much less price so..??? Prices will come down of different commodities how ..???

Because when there is more people demanding thesame good prices will rise because there are notenough goods.compare to the demand.


7/17

So in general what rbi is doing is to curb the inflation it is increasing the interest rates

so people can save more and demand less. So increasing the interest rate

will also bring the corporate

profitability ..how ???(morewill be the interest rate for borrowing also. So people and the corporate people will nottake than interest rate at the

higher rate. Because that will be costly .and even if they take it will be really costly for them.(Lolz)


8/17

Role of interest rate

So by the increased interest rare corporateprofitability will come under pressure. how..??(I just tried to explain in my previous slide.)

By this it will shoo.. Away the foreign investorshow. because when they will see companies arenot making much profit .they are not able to

borrow the money to fund for their operationsand are not able to make profit.they will try to goaway from indian companies


9/17

Pressurring currency

This will again add pressure to the currencybecause there are no dollars are coming in.

So slowly slowly reserve of dollar will start toget diminishes.

Well the falling rupee has in turn hurt India'simport bill .


10/17

A litle example Because we are paying in ruppes but compare to dollar

the value of rupee has gone down. So we have to pay same amount of dollar to get the

same quantity of oil but to give more rupees from ourpocket( like that only is happening with only nowwhen we are going to the petrol pump we are givingthe same amount say 500rs before the prices haveincreased and again we are giving 500 after the priceshave increased but our tankii is not filling to that level.So now to fill up to the same level we have to givemore money.compare to the 500 rs.


11/17

Where is Subbaraoed.!

Well India is a net importer of goods with oilforming the largest portion of total imports.

Then falling rupee has increased the cost of imports which in turn has increased the currentaccount deficit. (Which is noting but the cost of import and export)

This deficit would need to be funded throughborrowings or equity investments (Foreign DirectInvestments or Foreign Portfolio Investments).


12/17

No more policy

Then again this hurt the investor which comesback to hurt the value of the currency (so its avicious cycle.)

So what is the way out? The rbi can step into the foreign exchange

markets and boost the rupee.


13/17

Poor ruppee How come by making it

clear that the vaue of rupee will not fallfurther compare to $

Like its happen ineurope some time back.That the swiss francswill not fall morecompare to euro (I thinkso .dont rember now.)

But the DeputyGovernor of RBI hasclearly stated that thebank has no suchintentions

It will intervene only inthe event of excessivevolatility. And not tocontrol the slide of therupee that we areseeing in recent times


14/17

D . Subba Which means it will let it fall further.. As India's imports grow, the foreign exchange

reserves will soon become inadequate tosustain the growing deficit. This would in turnlead to a higher demand for the US dollarwhich would lead to a further fall in the valueof the rupee. And with the RBI clearly statingthat it will not intervene, it looks like rupeewill continue its free fall for a while.


15/17

Well lets look at the other side of the coinalso. Companies whose main business is toexport the servies such as IT and also the

goods . So for them it is a profitable situationthey will get more money when they willconvert the dollar .

And can also move toward the exportingcountry so more money will come in. but rightnow we inport more than we outport.


16/17

Just like china how it has done until now bymaking it currency artificially low compare todollar. So that people from the dollar side canpurchase more in same amount of dollar.


17/17

Equity master AJ updated Nov 19, 2011 Industrial production down, GDP growth coming down,

fiscal deficit going up, government revenue collection is coming down.Therefore as a short term arrangement the government is trying to boostits revenue by allowing rupee to fall. On one side customs duty collectionwill go up. As such export profits are now taxed, IT companies will showbetter results due to weak rupee so Income tax collections can beimproved. Good currency management and fiscal management. Hats of Pranabji. Crude prices are coming but due to rupee weakening he neednot reduce prices any further and collect extra cash. One really wonderwhen dollar and euro are not healthy and on the other hand India is not

that affected by the western debacles, how come rupee is gettingweakened. From 5 minute wrap up site equity master

for what reason rupee is falling

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