Rupee value & its impact on various sectors


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Rupee value & its impact on various sectors

  1. 1. Rupee Value & Its Impact On Various Sectors Team 4 Saiteja Nagarjuna Adiga Mohammed Zameer Nagendra Prasad Nagarjuna MR
  2. 2. 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.
  3. 3. 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
  4. 4. Reasons for Rupee Depreciation …..  Withdrawal of investors  Downgrading of Indian stocks  Condition of import bill  Contraction of Indian economy  Future prospects of INR
  5. 5. Infrastructure
  6. 6.  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 infrastructure building.  Fresh investments in infrastructure could also get over priced.
  7. 7.  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 rupee devaluation.  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.
  8. 8. Agriculture
  9. 9.  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.
  10. 10. 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.  India’s decision to allow one million tonnes of sugar exports will be advantage.  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.
  11. 11. 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
  12. 12. Tourism  Domestic Destinations  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
  13. 13. Education  The lure of foreign education  Impact of depreciation of rupee
  14. 14. Pharmaceuticals sector  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
  15. 15. Real Estate Sector
  16. 16. 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 consultancy, architects  Higher Inflation rate and weak economic condition make unfavorable climate for investor.  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
  17. 17. Manufacturing Sector  Rising import bill  Volatility affecting business  Quoting of prices  Demand for heavy discounts  Overall loss of business confidence  Price hike by manufacturing companies
  18. 18. IT Sector  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
  19. 19. 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
  20. 20. 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
  21. 21. “We invented money and we use it, yet we cannot understand its laws or control its actions. It has a life of its own” -Lionel Trilling