Rupee Value & Its Impact On
Rupee is the Indian Currency
Rupee Value Appreciation
Rupee Value Depreciation
Rupee changes values for a range of reasons, like if US
performs very well then people will demand more US dollars,
exchanging their rupee. This Demand will raise the price of the
US dollar and hence depreciate the Indian Rupee.
Reasons for Rupee Depreciation
Basic law of economics
Low forex reserves
Price of crude oil
Performance of dollar with respect to other currencies
Volatility in the equity market
Effects of equity market problems on investors
Poor current account deficit
Reasons for Rupee Depreciation …..
Withdrawal of investors
Downgrading of Indian stocks
Condition of import bill
Contraction of Indian economy
Future prospects of INR
Around 15 per cent of the borrowings of infrastructure
companies have been in dollar terms
Increased the price of construction equipment and building
materials results in enhanced project execution cost.
Increasing costs of inputs like steel and cement are also affecting
Fresh investments in infrastructure could also get over priced.
Construction contractors are heavily dependent on imports for some of
their specialized equipment like high-capacity cranes, automated bar-
bending equipment, and tunnel boring equipment etc.
With many metro rail projects under construction, the cost of these
equipment have gone up by more than 25 per cent purely because of
companies such as JP Associates, NCC, HCC, IRB Infra, and GMR
Infra, that have raised capital through foreign currency loans, will have
to pay higher interest.
These companies have already been hit by the high working capital
requirement and a slowdown in the awards of new projects.
Fall of rupee is not likely to impact the rate of interest as
the farm loans are being given at a low rate of interest
There is Impact on the prices of fertilizers and diesel but it
would be compensated either by the way of subsidy or by
increasing the minimum support price.
Fall in Rupee has led to high food inflation.
Here are a few facts on how the rupee could influence
some of the top commodities:
Sugar & Wheat:
A softening rupee will be advantage for exporters from India.
India has a price advantage over supplies from Brazil and Thailand.
to allow one million tonnes of sugar exports will be
India is world’s largest producer of wheat.
There’s hardly any impact of the falling rupee on wheat as domestic prices
remain higher than global levels.
With falling global prices, traders believe India may not export wheat at all.
Rice & Edible oil
Depreciation in the rupee will lift margins for Indian rice exporters.
The country is aiming for a record 102 million tonnes output against local
demand of about 90 million tonnes
Many exporters have already negotiated their dollar-rupee forward rates,
which means they will not benefit from any change in the rupee valuation
India is the world’s top buyer of edible oil.
imported oils like palm and soy have risen in local markets
Edible oils have 3.04 percent weightage in the inflation index
Rupee against the dollar
Foreign travel plans
Win-win situation for the country’s tourism sector
India’s popularity as a holiday destination
The tourism industry will grow big time in India
The lure of foreign education
Impact of depreciation of rupee
Growing domestic pharma market
Half the total revenue is from global market
Larger firms like Glenmark and Ranbaxy to face heat
Increase in the price of imported raw materials and chemicals
Effects and impacts
increases the project cost and time frame followed by the increased in the
prices of raw material, transportation, wages and salary of labor, engineers,
import of construction equipment etc , outsourced services in form of design
Higher Inflation rate and weak economic condition make unfavorable climate
Real estate sector is a second largest employment generator after agriculture
as demands of property declining it not only affect economy.
NRI has a advantage to invest in real estate at current point this provide best
option to invest in real estate
Rising import bill
Volatility affecting business
Quoting of prices
Demand for heavy discounts
Overall loss of business confidence
Price hike by manufacturing companies
Will push up short term earnings
Hiring and offshore operations cost increase
Depreciation could lead to bargaining
Import of high end equipment end up in more payment
Prescription For Ailing Rupee
Issue of Quasi Sovereign bonds
RBI to provide dollars directly to state oil companies
RBI will sell Rs 22000Cr bonds to check liquidity
Hiking the import duty on gold and silver
RBI liberalized bank deposit schemes and some banks raised
rates for overseas Indians
Prescription For Ailing Rupee.....
Indian companies have to seek RBI's permission if they want
to invest any amount beyond their net worth abroad
PSU oil companies would be allowed to raise additional funds $4 billion - through external commercial borrowings
“We invented money and we use it, yet
we cannot understand its laws or
control its actions. It has a life of its