1. what are the expected impacts of weakening of rupee on indian economy?
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Weakening o Indian rupee mans that the value of Indian rupee is falling. This would mean that that Indian rupee will buy less in the world , but it also means it would mean we are also in a position to sell more. However it is not clear that Indian rupee has weakened in the international market by looking at the exchange rate against US Dollars.
India has the highest trade with China, US, EU, Iran , Saudi Arabia. Russia, Japan. When the exchange rate drops against US Dollar our rates might be rising with other Natons. That is as of today the India's major import is crude oil and fertilisers, defence equipments, and power generation equipments, oil exploration equipments and other capital equipments.
Similarly we have lots of invisibos such as remittances from abroad , tourism imports and vice versa. There are many more heads under which India has traditional relations with foreign countries.
If one looks at the over all picture our currency have moved better with corr undies of many countries as we import heavily from China, OPEC , as we are importing a lot of energy and Consumer goods and thus our balance of payment will be influenced by the balance of pqmeev.
Reserve bank works out a Composite Effective Exchange rate based on the weightage of exchange rate of Indian currency with respect to other currencies with whom we trade primarily. This would mean currency of Saudi Arabia and Iran and the currency we use for settlement is important.
Thus even though we some times find exchange rate of India rupee against dollar has fallen but in reality Indian currency has strengthened against most world currencies whilst the published Exchange rate seems to suggest Indian rupee has weakened.
I believe Indian rupee has strengthened against various currencies today even though Indian rupee has touched its lowest point these days and our exports have fallen.
Reserve bank has acknowledged there is a little more room for Indian rupee to fall to attain the equilibrium point.
Another cause of fluctuation in Exchange rate the flow of money on the basis of comparative Interest rates prevailing in various countries. For example if India offers a earning oppurtunity of say 7 to 15% and has a prospect of devaluation at about 3–4% and a risk factor of 3%. Many large investors and currency dealers like George Soros move money from one part of the world to another and these would affect the exchange rate. Thus there is nothing much to be afraid of the fluctuations of exchange rate as long as any countries fund managers are competent and take all steps within the boundaries of reasons and prudence.
Reserve bank of India has managed our currency even in the worst of times including '91 when we had a currency. So let us rest assured that nation is in good hands except when political leaders interfere in the management of currency like what happened in the time of demonetisation.
Exchange reflectss the reality of of a country's economy vis a vis other major countries.
India has the highest trade with China, US, EU, Iran , Saudi Arabia. Russia, Japan. When the exchange rate drops against US Dollar our rates might be rising with other Natons. That is as of today the India's major import is crude oil and fertilisers, defence equipments, and power generation equipments, oil exploration equipments and other capital equipments.
Similarly we have lots of invisibos such as remittances from abroad , tourism imports and vice versa. There are many more heads under which India has traditional relations with foreign countries.
If one looks at the over all picture our currency have moved better with corr undies of many countries as we import heavily from China, OPEC , as we are importing a lot of energy and Consumer goods and thus our balance of payment will be influenced by the balance of pqmeev.
Reserve bank works out a Composite Effective Exchange rate based on the weightage of exchange rate of Indian currency with respect to other currencies with whom we trade primarily. This would mean currency of Saudi Arabia and Iran and the currency we use for settlement is important.
Thus even though we some times find exchange rate of India rupee against dollar has fallen but in reality Indian currency has strengthened against most world currencies whilst the published Exchange rate seems to suggest Indian rupee has weakened.
I believe Indian rupee has strengthened against various currencies today even though Indian rupee has touched its lowest point these days and our exports have fallen.
Reserve bank has acknowledged there is a little more room for Indian rupee to fall to attain the equilibrium point.
Another cause of fluctuation in Exchange rate the flow of money on the basis of comparative Interest rates prevailing in various countries. For example if India offers a earning oppurtunity of say 7 to 15% and has a prospect of devaluation at about 3–4% and a risk factor of 3%. Many large investors and currency dealers like George Soros move money from one part of the world to another and these would affect the exchange rate. Thus there is nothing much to be afraid of the fluctuations of exchange rate as long as any countries fund managers are competent and take all steps within the boundaries of reasons and prudence.
Reserve bank of India has managed our currency even in the worst of times including '91 when we had a currency. So let us rest assured that nation is in good hands except when political leaders interfere in the management of currency like what happened in the time of demonetisation.
Exchange reflectss the reality of of a country's economy vis a vis other major countries.
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