How can we increase the value of indian money over the dollar
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Decline in value of rupee is not necessarily a bad thing. All of us have seen those stupid arguments where it was shown that few years ago 1$=30-40₹ & now it is 60-70, so the governance is bad and country is headed towards a crisis. It is total and utter non-sense. In economics there is a concept of impossible trinity. It means you can only control 2 of the following 3 factors :
1. Currency Exchange rate.
2. Central Bank interest rates
3. Open capital account.
For example in Hong Kong, the currency rate is fixed (pegging). In turn, they have open capital account and they can manipulate interst rates.
China have 1 & 2 and not 3.
USA have 2 & 3 and not 1.
Problem arises when a nation try to have a little of all 3. In that case, lot of problem can arise, which we all are more than aware of.
1. Currency Exchange rate.
2. Central Bank interest rates
3. Open capital account.
For example in Hong Kong, the currency rate is fixed (pegging). In turn, they have open capital account and they can manipulate interst rates.
China have 1 & 2 and not 3.
USA have 2 & 3 and not 1.
Problem arises when a nation try to have a little of all 3. In that case, lot of problem can arise, which we all are more than aware of.
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