Era Business School

AJ/ Ajay K Raina;
OBJECTIVE
To show impact of money supply
and inflation on exchange rate of ₹
v/s
$ and analyse it for the period 1980 to
1...
120.00

A SIMPLISTIC REPRODUCTION…….What lies ahead!

100.00

80.00

60.00

40.00

20.00

0.00

-20.00

-40.00

-60.00

Er...
Broad Parameters
• Data, as used in the presentation, are in terms of
percentage (YoY) increase.
• The following values ha...
1980- 1990
14.00

COMPARATIVE INFLATIONARY TRENDS

12.00

10.00

8.00
GDPd India%
GDPd US%

6.00

4.00

2.00

0.00
1980

1...
Era Business School
Era Business School

AJ/ Ajay K Raina;
AJ/ Ajay K Raina; PGDM 12’14
1980- 1990
20.00

18.00

16.00

14.00

12.00
GDPd India%
GDPd US%

10.00

ER% incr
M1 growth % ₹
8.00

M1 growth% $

6.00
...
1980- 1990
BOP Million $
1000.00

500.00

0.00
1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

-500.00

...
1980- 1990
Overall Equations
Year

Inflation %
India

Inflation %
USA

M1 India
Bn ₹

1980

11.51

9.12

200

1990

10.67
...
1991- 2000
COMPARATIVE INFLATIONARY TRENDS
16.00

14.00

12.00

10.00

8.00

GDPd India%
GDPd US%

6.00

4.00

2.00

0.00
...
1991- 2000
35.00

30.00

25.00

20.00

GDPd India%
15.00

GDPd US%
ER% incr

10.00

5.00

0.00
1991

-5.00

1992

1993

19...
1991- 2000
35.00

30.00

25.00

20.00
GDPd India%
GDPd US%
15.00

ER% incr
M1 growth% $
M1 growth % ₹

10.00

5.00

0.00

...
1991- 2000
BOP Million $
10000.00

8000.00

6000.00

4000.00

BOP Million $

2000.00

0.00
1991

-2000.00

1992

1993

199...
1991- 2000
Overall Equations
Year

Inflation %
India

Inflation %
USA

M1 India
Bn ₹

1991

13.75

3.40

929

2000

3.65

...
Era Business School
Era Business School

AJ/ Ajay K Raina;
AJ/ Ajay K Raina; PGDM 12’14
2001- 2012
15.00

10.00

5.00
GDPd India%
GDPd US%
ER% incr
0.00
2001

2002

2003

2004

2005

2006

2007

2008

2009

201...
2001- 2012
25.00

20.00

15.00

10.00
GDPd India%
GDPd US%
5.00

ER% incr
M1 growth% $
M1 growth % ₹

0.00
2001

2002

200...
2001- 2012
BOP Million $
100000.00

80000.00

60000.00

40000.00
BOP Million $
20000.00

0.00
2000

2001

2002

2003

2004...
2001- 2012
Overall Equations
Year

Inflation %
India

Inflation %
USA

M1 India
Bn ₹

2001

3.18

2.27

3794.33

2011/ 7.7...
16.00

1980- 2012

INFLATION

14.00

12.00

10.00

8.00

GDPd India%
GDPd US%

6.00

4.00

2.00

0.00

Era Business School...
1980- 2012

INFLATION+ ER

35.00

30.00
GDPd India%

25.00

GDPd US%
20.00
ER% incr
15.00

10.00

5.00

0.00

-5.00

-10.0...
1980- 2012

INFLATION+ ER+ MS

35.00

30.00

25.00

20.00

15.00

ER% incr
GDPd India%

10.00

GDPd US%
M1 growth% $
M1 gr...
And once we add Forex and Foreign Debts (all in % YoY).…..
120.00

100.00

80.00

60.00
ER% incr
GDPd India%

40.00

GDPd ...
Methodology
• Guidance : Our gratitude to Prof JS Dahiya
• Secondary research based on the following websites:–
–
–
–
–
–
...
Comparison with Article….
• The article, “Solving the Riddle” (Cato Institute;
published in Business India) simplistically...
……Comparison with Article
• Differential in interest rates, foreign debts and
perception about country’s political and eco...
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₹ vs $ - 1980 to 2012

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To show impact of money supply and inflation on exchange rate of ₹ v/s $ and analyse it for the period 1980 to 1990, 1991 to 2000 and 2001 to 2012; a ppt by a group of students of Era Business Achool, New Delhi

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₹ vs $ - 1980 to 2012

  1. 1. Era Business School AJ/ Ajay K Raina;
  2. 2. OBJECTIVE To show impact of money supply and inflation on exchange rate of ₹ v/s $ and analyse it for the period 1980 to 1990, 1991 to 2000 and 2001 to 2012 Group Members Jay Krishna Col Ajay K Raina, SM Saurabh Daravaria Era Business School Era Business School Deepika Handoo AK Mishra AnantAjay K Raina; AJ/ Maheshwari AJ/ Ajay K Raina; PGDM 12’14
  3. 3. 120.00 A SIMPLISTIC REPRODUCTION…….What lies ahead! 100.00 80.00 60.00 40.00 20.00 0.00 -20.00 -40.00 -60.00 Era Business School AJ/ Ajay K Raina;
  4. 4. Broad Parameters • Data, as used in the presentation, are in terms of percentage (YoY) increase. • The following values have been used:– ER – Market price, averaged to calendar year. – Inflation – GDP deflator. – Money Supply – Narrow Money only. Era Business School AJ/ Ajay K Raina;
  5. 5. 1980- 1990 14.00 COMPARATIVE INFLATIONARY TRENDS 12.00 10.00 8.00 GDPd India% GDPd US% 6.00 4.00 2.00 0.00 1980 1981 1982 1983 Era Business School 1984 1985 1986 1987 1988 AJ/ Ajay 1990 K Raina; 1989
  6. 6. Era Business School Era Business School AJ/ Ajay K Raina; AJ/ Ajay K Raina; PGDM 12’14
  7. 7. 1980- 1990 20.00 18.00 16.00 14.00 12.00 GDPd India% GDPd US% 10.00 ER% incr M1 growth % ₹ 8.00 M1 growth% $ 6.00 4.00 2.00 0.00 1980 1981 1982 1983 Era Business School 1984 1985 1986 1987 1988 AJ/ Ajay K Raina; 1989 1990
  8. 8. 1980- 1990 BOP Million $ 1000.00 500.00 0.00 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 -500.00 -1000.00 BOP Million $ -1500.00 -2000.00 -2500.00 -3000.00 Era Business School AJ/ Ajay K Raina;
  9. 9. 1980- 1990 Overall Equations Year Inflation % India Inflation % USA M1 India Bn ₹ 1980 11.51 9.12 200 1990 10.67 3.79 810.10 Era Business School M1 USA Bn $ ER 1$=….₹ BOP Mn $ 465 7.88 -1140 907 17.50 -2492 AJ/ Ajay K Raina;
  10. 10. 1991- 2000 COMPARATIVE INFLATIONARY TRENDS 16.00 14.00 12.00 10.00 8.00 GDPd India% GDPd US% 6.00 4.00 2.00 0.00 1991 1992 1993 Era Business School 1995 1996 1994 1997 1998 AJ/ Ajay2000Raina; K 1999
  11. 11. 1991- 2000 35.00 30.00 25.00 20.00 GDPd India% 15.00 GDPd US% ER% incr 10.00 5.00 0.00 1991 -5.00 1992 1993 1994 1995 1996 Era Business School 1997 1998 1999 2000 AJ/ Ajay K Raina;
  12. 12. 1991- 2000 35.00 30.00 25.00 20.00 GDPd India% GDPd US% 15.00 ER% incr M1 growth% $ M1 growth % ₹ 10.00 5.00 0.00 1991 -5.00 1992 1993 1994 1995 1996 Era Business School 1997 1998 1999 2000 AJ/ Ajay K Raina;
  13. 13. 1991- 2000 BOP Million $ 10000.00 8000.00 6000.00 4000.00 BOP Million $ 2000.00 0.00 1991 -2000.00 1992 1993 1994 1995 Era Business School 1996 1997 1998 AJ/ Ajay K Raina;
  14. 14. 1991- 2000 Overall Equations Year Inflation % India Inflation % USA M1 India Bn ₹ 1991 13.75 3.40 929 2000 3.65 2.16 2678.44 Era Business School M1 USA Bn $ ER 1$=….₹ BOP Mn $ 985.80 22.69 2599 1211.51 41.27 4222 AJ/ Ajay K Raina;
  15. 15. Era Business School Era Business School AJ/ Ajay K Raina; AJ/ Ajay K Raina; PGDM 12’14
  16. 16. 2001- 2012 15.00 10.00 5.00 GDPd India% GDPd US% ER% incr 0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -5.00 -10.00 Era Business School AJ/ Ajay K Raina;
  17. 17. 2001- 2012 25.00 20.00 15.00 10.00 GDPd India% GDPd US% 5.00 ER% incr M1 growth% $ M1 growth % ₹ 0.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 -5.00 -10.00 -15.00 Era Business School AJ/ Ajay K Raina;
  18. 18. 2001- 2012 BOP Million $ 100000.00 80000.00 60000.00 40000.00 BOP Million $ 20000.00 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -20000.00 -40000.00 Era Business School AJ/ Ajay K Raina;
  19. 19. 2001- 2012 Overall Equations Year Inflation % India Inflation % USA M1 India Bn ₹ 2001 3.18 2.27 3794.33 2011/ 7.75 12 1.72 17342.34 Era Business School M1 USA Bn $ ER 1$=….₹ BOP Mn $ 1213.52 7.88 11757 2323.95 17.50 -12832 AJ/ Ajay K Raina;
  20. 20. 16.00 1980- 2012 INFLATION 14.00 12.00 10.00 8.00 GDPd India% GDPd US% 6.00 4.00 2.00 0.00 Era Business School AJ/ Ajay K Raina;
  21. 21. 1980- 2012 INFLATION+ ER 35.00 30.00 GDPd India% 25.00 GDPd US% 20.00 ER% incr 15.00 10.00 5.00 0.00 -5.00 -10.00 -15.00 Era Business School AJ/ Ajay K Raina;
  22. 22. 1980- 2012 INFLATION+ ER+ MS 35.00 30.00 25.00 20.00 15.00 ER% incr GDPd India% 10.00 GDPd US% M1 growth% $ M1 growth % ₹ 5.00 0.00 -5.00 -10.00 -15.00 Era Business School AJ/ Ajay K Raina;
  23. 23. And once we add Forex and Foreign Debts (all in % YoY).….. 120.00 100.00 80.00 60.00 ER% incr GDPd India% 40.00 GDPd US% M1 growth% $ M1 growth % ₹ 20.00 Foreign Debt % Forex% 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985 1984 1983 1982 1981 1980 0.00 -20.00 -40.00 -60.00 This is where we had started from Era Business School AJ/ Ajay K Raina;
  24. 24. Methodology • Guidance : Our gratitude to Prof JS Dahiya • Secondary research based on the following websites:– – – – – – – – – – http://www.imf.org IMF http://dbie.rbi.org.in Reserve Bank of India http://commerce.nic.in/ Ministry of Commerce http://databank.worldbank.org World Bank http://www.inflation.eu EU http://mospi.nic.in Ministry of Stat and Pgme Implementation www.IndianJournals.com Publisher http://labourbureau.nic.in/indnum.htm Labour Bureau http://oldfraser.lexi.net/publications/ Publisher http://fxtop.com/en/currency-converter-past.php Historical Currency rates. – http://www.federalreserveonline.org/ Fed Res Ajay K Raina; Era Business School AJ/
  25. 25. Comparison with Article…. • The article, “Solving the Riddle” (Cato Institute; published in Business India) simplistically explains the change in currency value. • The main factors that influence ER, as per the article, are as under:– Inflationary Pressure; – Money Supply; and – BoP/ Forex. • Our research has highlighted the above linkages too and yet do believe that there are certain hidden forces that have a role, big or small, to play in such fluctuations. Era Business School AJ/ Ajay K Raina;
  26. 26. ……Comparison with Article • Differential in interest rates, foreign debts and perception about country’s political and economic performance are some of the key factors that have a role to play. These being out of the purview of today’s presentation, same have been left out. THANK YOU! Era Business School AJ/ Ajay K Raina;

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