Dollar up and rupee down - Why
91Rupee rebounds: RBI intervened and threatened to penalize exporters and banks from violating its instructions over stop converting dollar into rupee in a fortnight. This has helped rupee to rebound some. Today 1 U.S. dollar = 55.4108716 Indian rupees
As anticipated, oil minister has raised petrol prices by 7 rupees per liter due to downward trend of rupee. RBI always tried to protect rupee by selling off dollars but still has been unable to hold rupee from falling at a rapid pace. The last resort of controlling rupee fall is issuing bonds by Reserve Bank of India. To prevent further downfall of Indian rupee, RBI is considering selling dollars directly to oil marketing firms.
Now let's look into why dollar is appreciating heavily against rupee.
Recession is less in India, then why dollar is moving up when rupee must be strong.
We all know about recession and it is worse in US and better in India as compared to US, then how come dollar is appreciating with respect to Indian rupee? Don't you think that Indian rupee should go up and US dollar should move down?
There are so many reasons of depreciating rupee, but I would like to explain the first one, which is most important.
Why dollar is moving up and rupee is going down? There has been a recent fall in rupee since some days ago and a dramatic increase in dollar. It was 49.50, then 50.12, 51.10, 52.60, 53.54, 54.40, and yesterday it was 55.32 and today according to google search 1 U.S. dollar = 55.4108716 Indian rupees. Why is this happening?
First Reason - Dollar is in Demand
BRIC countries like India have emerging economy, so a huge percentage of investment in India is from outside the country, especially from US but due to recession in US, big institutions are collapsing and many of them are on the verge of breakdown. They are suffering huge losses in their country. They have to maintain their balance sheets and look strong on all statements, so to recover losses in their country, they are pulling out their investments from India. Due to this pulling out of investment by these big companies from India or in other terms disinvestment, demand of dollar is raising up and rupee is depreciating.
There was a huge interest rate differential between India and US. Now RBI is reducing all kind of rates to increase money supply in market, so deposit rates will also move downwards. It will reduce the rate differential between two countries and affect the fixed investment in India in a negative manner.
Second reason - Collapse of International Trade
If you observe in terms of international trade, commodity prices are crashing at international level.
Importers are trying to accumulate dollars, as they have to pay in terms of dollars and at the end demand is increasing against the rupee. This has not happened yet due to lack of confidence in all kind of markets.
Exporters have a very few orders from outside countries, so there is no matter of converting dollar into rupee thereby decreasing demand for rupee.
Besides the above-mentioned two reasons, there are many other reasons, which I would like share in the comments section below with you and others.
Now 1 USD is at 55.41 INR and expected to appreciate further due to huge inflows. The major gainers are Indian IT companies including BPOs, call center outsourcing, medical transcription outsourcing, and Indian content writers, especially Indian Adsense publishers who also earn in dollars.
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In the last paragraph, when the article say "Now rupee is at 46.90 and expected to appreciate further", its wrong. its not rupee but the dollar that is 46.9Rs and appreciating. This will not impact IT companies and BPOs but will help them, as they earn in dollars. And each dollar they earn will have more value in India now.
in case of recession in the U.S the dollar's value is decreasing , so how people or investors can withdraw their investments from India. Still they know that they can earn better...?
Good need more static data for why US $ up not Rupee...
thr is a any chances in future rupee value may go up
sir will gold price come down to 15000/- if it so when to invest in gold pl return back statements
i dont think we shaed to move upll c gold at 15000 in next 2 months, afterwards if it catches loweside wave than perhaps we can , but expected to move up only...
yes right when someone earns in dollar its good for him that dollar appreciates against rupee
Good..
nice article
Indian import and FDI policy not in tune of US recession.Our economist PM is to help US but not Indian. If we re-think about our import s,we can save our economy.otherwise we will follow Europe model.
we know that,most of the European union countries are in crisis at present. i happened to read form some journals that one of the major reasons for depreciating Indian rupee is also the same.they had pointed out that, the value of EUR is also decreasing against the dollar.if it is true,then why the value of EUR against Indian rupee is increasing,when India is performing more good than the EU ?
(it has reached at 70.94 in 22nd NOV)
thak you . its good. but we
need a stastical review too....
The fact is is, it's not just USD, pretty much GBP, EURO AUD everything is going up. I guess this is a an Indian finance strategy to incur more overseas deposit.
Over the last two years, because the Indian rupee was strong, overseas/NRI deposits to India was low.
I might be a stupid, just guessing. Any comments?
its all depend upon import and export. demand for export is less due to the crises in europe and US and importer was take thier money back
It's nice... we have to stop it...
That's not why the FII are pulling out. If US had to pull out, they would had pulled long ago in 2008, when there was real crisis. Currently the dollar is getting stronger because of save haven. All economies are slowing down with some big crisis in some countries, earlier the US dollar was down because the save haven was euro. The rupee will decline until the euro crisis is over. Its not a actually rupee which is declining, US dollar has appreciate, Another thing the major India purchases (oil, gold) are done in US dollar, as the dollar gets stronger , it gets expensive for India, and shell out lots of dollars. They have to give away lots of rupees to buy dollars, which down the rupee
is there any chance to stablise this rupee fall?? And what all efforts are expected from RBI and Govt. As if this continues then infletion may go up again as petrol and disel price will start increaasing
when suppose to reduce the dollar rate
the main factor isinflation interest ratecurrent account deficit
will the dollar value decrease respect to rupee???
yes why not let's hope for the best........
is there is any chances of fall of rupeee???
in the last two weeks Indian rupee has depreciated about 7% against the USA dollar value. It is expected that it would continue the slide as many macro economic factors like foreign funds outflow,increasing government's deficit,political uncertainty etc..are not in favor of Indian economy.
When will the dollar rate come down? I've heard from many people that this recession is going to continue for a period of 20 years.. Is that true?
this is the game of sovereign rule....400 years ago Britishers came and robbed food, diamonds, gold, now by capitalism they want to own a globe...land of other country..think IT people only can buy house..they are buying for just tax saving purpose..ruined our farm..for Indian common people nothing left...where they will go....no where...they will farm labor one day..awake now...plz...
Euro crisis helped dollar to grow,Less demand for our exports,we have to pay in dollar for our imports, Pulling off FDIs from our country due to crisis in their countries are some of the reseans for dollar
appreciation against Indian rupee
Dr. S. Vijay Kumar
ya i accept the reason ,but what is the part of IT people
in this recession?
About 61% of the Indian IT sector’s revenues are from US clients. If you just take the top five India players who account for 46% of the IT industry’s revenues, the revenue contribution from US clients is approximately 58%. About 30% of the industry revenues are estimated to be from financial services.A recent study by Forrester reveals that 43% of Western companies are cutting back their IT spend and nearly 30 percent are scrutinizing IT projects for better returns. Some of this can lead to offshoring, but the impact of overall reduction in discretionary IT spends, including offshore work, cannot be denied. The slowing U.S. economy has seen 70 percent of firms negotiating lower rates with suppliers and nearly 60 percent are cutting back on contractors.The US financial crisis puts a question mark on growth for Indian IT in the short-to-medium-term.these problems in IT sector making it a leader of current economic crisis. shihab ali.m(b.com 2nd,psmo college thirurangadi)
In a short can someone tell me if there is any chance for Dollar value to go up again like 52 or more than that in coming months(Feb/March/April)?
now the dollar rate s 53 then y Indian rupee s not increasing at least one rupee also Indian rupee s constant and dollar rate increasing more and more
give more reasons for better understanding and tell how to regain rupee up
The main reason behind the depprication in rupee is that now the market in india are cash strapped as bank rates are at peak and another reason is that now investors from all around the world are investing in swiss franc
we hav a gd on this topic 2mrw
in this time indian rupee goes up & my question is that how much time it take to make it constant or it goes up in near future?
hows indian currency up and down ,and also what points effect on it?
I fully agree with you now the rate touch around 54.Now very difficult to revive Rupees in near future.
stop buying vieshi goods.....
Thanks a lot for all your comments friends.
in ths condition of decreasing rupee, how to earn more money in ths situation.
Hello Manoj write articles earn dollars and convert in rupees at Hubpages
its very complicated to review all the economic and political factors very systematicaly because the infuence of these economic and political forces can not be measure accurately. There are lot of factors which influence the exchange rate for a currency.
These are:
1. Economic performance of the economy
2. Foreign capital flow
3. Inflation rate in the economy
4. Itrest rate previlage in the economy
5. Balance of payment position of the economy
6. Fiscal position of the economy
7. Performance of the stock market
8. Economic conditions prevailing in economy itself and in those economies which are significant trade partner and investor for the economy
9. Efforts of the central bank in managing the exchange rates
10. Political stability
A person who is intresting in knowing about exchange rate fluctuation should analyze the above mention factors seperately and may acquire a sound reasoning about the currency fluctuation scenario.
thanks to hubpages
Thanks for your comments Sanjeev and Mohish.
indian govt. has all fucked up !!!
they don't know how to run the govt.,that's the major reason of depreciation of rupee............
Shreyans you can share your views but please refrain from using abusive language on this web page.
shreyans is right,if we don't raise our voice against indian govt. depreciation of rupee continue ,and that means selling india gradually.
if the main reason is ""BRIC countries like India have emerging economy, so a huge percentage of investment in India is from outside the country, especially from US but due to recession in US, big institutions are collapsing and many of them are on the verge of breakdown. They are suffering huge losses in their country. They have to maintain their balance sheets and look strong on all statements, so to recover losses in their country, they are pulling out their investments from India.""
then we need new trade plan for outside investor.and only indian govt. can execute such tusk.
Shreyans and Sam both are right and by the way, petrol prices have already shot up 7 rupees per liter. Now what government will do?
stop thinking about sachin tendulkar hitting 100th 100 as he has recently achieved it.....,
stop thinking abt petrol prices in india hitting 100 its 81 in andhrapradesh so soon it wil reach that land mark ...,
... now bite all your nails sitting eagerly in front of markets watch ... its soon happening .... 100 against 1 US $ in a weeks time ..looking at the current situation ...
i really feel bad at whats happening ... INDIA a nation of such wisdom and strength is at 56 th position in terms of 1 dollar today...
pity ..real pity !!!
i am not paid ... but still i feel bad about our situation... but people are paid in crores of rupees and still they dont do anything ????? i dnt understand y ....
Govt. done what they want to do, But if we think practically statistically as india import about 80% of its crude oil which is necessary, rupee depreciating is main reason ,india has to pay more due to low rupee value to import oil.
secondly goes deep in base, there should be such mechanism which will take care of the rupee factor, now we know crude oil is necessary but we can control import of gold by doing such rupee can prevent,
Thanks for ur inputs but we need a reasonable solution. Pretty sure there ate several gr8 analysts around who can discuss and help in this matter. Solutions will come when blaming will be stopped.
People needs to be keep their cool around this time , as the people ruling the country have enormous amount of experience and will not miss guide the people, they need your support there fore keep ur trust on them...
Let's see what happens next Silvanus. But I smell more downfall of rupee. Thanks for your comment.
this was a nice info.....
political bribes also the reason for recession. Now a days they people used too much of transport without reason. why people are go with bulk. for a single visit they(politicians) go with 10 more cars... if they stopped these kind of things... the oil consumption is automatically leveled.. they used their 10 days oil in a single day..how could it be....and people too, they also used cars for their even unwanted reason. they use buses for their daily use. otherwise train.. they should change their self, will help for our nation. people they can share their vehicle with their friends.yeah, they can go with more number of people instead of single. if we change our self, we can save our country from economic down and falling rate too.
things not to be chilly, i think so.
just think it of...
youngsters must co-operate with nation. we will save our country. just think of our country. you will get the reason, why we are like to be..
Thanks for sharing your views Anamika and Nithi.
Real truth! Nice think
Thanks for your visit Chandrashekhara.
What problem arises in india only reason for dis great indians. Why i'm thinking like because just visit one indian home(keep in your mind we importing petrol)we wil find out 3,4 bikes. How can we expect little reduce in petrol price or import level of the country.Is it not possible to reduce in bikes number?
Very nice point Chandu but just leave bikes apart they consume less petrol. Just have a look on the cars in an average home in Delhi. One family using 3 cars, one for the father, one for mother, and one for the son, even some people give cars to their drivers to go and shop for just grocery items.
can $ & rs. be vice versa in future ?
Not possible looking at the current scenario
why not, if we think we can. we need more dollars for fuel. is it? we each should think of our nation. why we couldn't do this. this situation goes, how could be we live.. how we save our people, our nation.
The only thing is going to be use less fuel..It could be better for our environment and too our savings.
neighbors can share their vehicle. youth can start these things first.. it will be followed by others in near future..
the main thing and the only thing is going to be use less fuel...
Please use less fuel.. save our lives more...
Nithy using less fuel and saving fuel is really great for any nation. Keep up the spirits.
black money of polititions in Swiss bank can help India....
I think Indian gov. is unnecessarily creating inflation by making different polices , so that the rate of interest of their black money will increase
so many problems are in our country. finally they meet in a point. that's with politicians. we know little number of politicians have a great background from their brought up itself. But many are started their life with normal...but now few of them in the list of world's richest people. how it could be. who will ask against them. how can control them. why the govt. don't take action against them.
obviously we know those(few of them) who are having black money. Even can't we take any steps against them.
someshwar patil 8 months ago
US & Eru Crisis affecting too much because FII & invester protecting them self and their own business they pulling their investment and tring to protect their own business and one more reason is demand for indian exporters very low so demand for Rupee is very low these are the reason why rupee depriciating agnst dollar