Indian ₹ may falls all time low @70 to $, How it benefits & costs to you!
The rupee can touch 70 to the US dollar. The rupee may tumble to a new low level in this year due to multiple headwinds like weak global cues (Trump's trade war) and concerns related to inflation, fiscal slippage & other international political changes.
Why Indian ₹ falling:-
The reason is an obvious one the dollar is gaining strength on news of a robust economic recovery in the US.
The reason is an obvious one the dollar is gaining strength on news of a robust economic recovery in the US.
Other factors like global clue, Inflation, Fiscal slippage, decline export etc are may be reasons for that. Global Trade war fears pop up by US and China's retaliatory import tariffs have weakened the Rupee. USA Federal bank raises interest rate up to 1.75% from 0.05%, putting FII(Foreign Institutional Investments)flows in reverse mode.
Other hand RBI adopt hawkish policy highlights upside risk to inflation, it increases repo rate adding more cost to borrower, Founds setbacks to demostic production.
The relentless rise in purchases of Mobiles, TVs, luxury cars and other electronics have made electronics India’s second-biggest import item after oil, and is pushing the nation’s trade deficit wider. That’s bad news for the ₹, which is already roiled by worries of costlier imported oil. Economists forecast Current Account Deficit(CAD) widen to 2.3% of Gross Domestic Product (GDP) in the fiscal year to March 2019, from 1.9% currently. The general budget always comes out with higher application funds than sources of funds it means Indias fiscal deficit (FD) increase in absolute term (But Gov. beating drums and celebrates as of they reduces FD by %, Read- FRBM Act 2003)
How it's bad:-
A weak ₹ against the $ makes imports costlier it means India needs to pump more ₹ to get oils and imports may tight the fiscal acc, Imports like oils cannot cut, which can negatively affect India's CAD. In a vicious cycle, depreciated ₹ add more cost to oil( A Indian citizens fires as of Petrol ⛽ & Diesel price ascend). Costlier oil means costlier Rations, foods, Loans (EMIs) since transportation costs go up &/or intrest rate rise. Weaker ₹ deleteriously affects those students who wants study in abroad.
A weak ₹ against the $ makes imports costlier it means India needs to pump more ₹ to get oils and imports may tight the fiscal acc, Imports like oils cannot cut, which can negatively affect India's CAD. In a vicious cycle, depreciated ₹ add more cost to oil( A Indian citizens fires as of Petrol ⛽ & Diesel price ascend). Costlier oil means costlier Rations, foods, Loans (EMIs) since transportation costs go up &/or intrest rate rise. Weaker ₹ deleteriously affects those students who wants study in abroad.
How it's good:-
A weak ₹ is good for exporters, they get more ₹ against $ for their exports. All export-based industry benefits from a weak ₹. But these are systematically wrong with government as a Indias export value lover than import, it means no government wants to sharp depreciate domestic currency with internation level (Read- China Yuan Devaluation game, Also WTO rules and Reg.)
A weak ₹ is good for exporters, they get more ₹ against $ for their exports. All export-based industry benefits from a weak ₹. But these are systematically wrong with government as a Indias export value lover than import, it means no government wants to sharp depreciate domestic currency with internation level (Read- China Yuan Devaluation game, Also WTO rules and Reg.)
Relatives of NRI dance with $ enrich, Inward remittance gain exra money as of value of domestic currency devalued against $.
In conclusion, Falling of Indian ₹ against foreign currencies is a perilous to domestic economy.
Thus the main point in favour of a weak rupee is the improvement of international competitiveness of Indian exports. manufacturing industry has not made great strides reflected in the declining manufacturing export-GDP ratio and manufacturing trade balance. ‘Make in India’ initiative has also suffered due to the low competitiveness of manufactures in global markets. India has an independent fiscal policy, monetary policy & Exchange rate motives. Hence India facing trilemma. Now India really needs to corrigendum in trade policy & economy clue. Robust manufacturing growth, creating jobs and Make In India can do lot more. India stand still to Good Day( Not biscuit 🍪 🤣🤣)
© Jignesh DesaiThus the main point in favour of a weak rupee is the improvement of international competitiveness of Indian exports. manufacturing industry has not made great strides reflected in the declining manufacturing export-GDP ratio and manufacturing trade balance. ‘Make in India’ initiative has also suffered due to the low competitiveness of manufactures in global markets. India has an independent fiscal policy, monetary policy & Exchange rate motives. Hence India facing trilemma. Now India really needs to corrigendum in trade policy & economy clue. Robust manufacturing growth, creating jobs and Make In India can do lot more. India stand still to Good Day( Not biscuit 🍪 🤣🤣)
Ping me here www.twitter.com/ijigneshdesai
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