Sunday 20 November 2011

The Fading Indian Rupee

This is something most of you might have been reading in newspapers and watching on news channels. The depreciating INR is sending a chill down the spine of the government (the economy), the corporate and economists alike. Though the common man would be least bothered about the "depreciation" of our currency, its effects on the economy and us are proving to be deleterious.

Let's try to analyse the case colloquially :

Let's begin with some factual numbers -

As of today : 1 USD = Rs. 51.3
Meaning you need to shell out Rs.51.3 to buy the resilient USD.

The same rate pondered between Rs. 40-45, when the world economy was travelling on a safe road; meaning you had to pay Rs.40-45 to buy $1.

The government understands the dismal effects of such numbers; the industrialists yearn to keep such numbers only in their wildest dreams; the economists hold a neutral stance ( it's study gives them jobs ); what about us ?!

The common man just takes a vituperative stance - accusing the government of their unending predicament - inflation, petrol prices - 2 of the common man's biggest problems. Well, the graft loving Indian government surely does have a role to play; but one of the major reasons lies in the fluctuating dollar-rupee exchange curve.
In such a case all we can do is to become silent spectators of the ongoing turbulence in the markets.

  • Withdrawal of money from the stock market : With the current state of affairs in Europe, the probability of a Greek default, or may be even Italian default - has forced investors to withdraw their money from the Indian equity market and invest them in some safer instruments. Some investors are even keeping hold of their dollar reserve to avoid any risk of losing their money - thanks to AA US Credit rating.
  • Indian economic commotion : Rising fuel prices, inflation - the top contributors to the investors apathy towards Indian markets.
Stock market bears the brunt of the aforesaid reasons. The stock prices decline -> equity in the form of USD starts vanishing -> INR comes under pressure -> INR Depreciates -> Prices of goods & services rise -> Dissatisfaction among consumers -> Blogger like me get a chance to present our views !!

So tomorrow, if you think you are going to accuse the government 'wholly' for your plight, think twice and just hope for a better INR vs USD exchange price.


Note : The views are personal. An effort has been made to explain the posts in the simplest of ways possible.

Thursday 10 November 2011

GREECE'S WOES - The Economist

A must read article from The Economist :

Greece's Woes