Story
behind fall of INR against Foreign Currencies
In recent times we have seen INR sliding
down against all foreign currencies. People come across with many reasons...
Do we actually know the reason??? Do we know to what extent it will slide???
Let us understand before getting into
conclusion the facts with figures.
INDIA CONSUMER PRICE INDEX (CPI)
Consumer Price Index (CPI) in India
increased to 231 Index Points in June of 2013 from 228 Index Points in May of
2013. Consumer Price Index (CPI) in India is reported by the Labour Bureau,
Government of India. India Consumer Price Index (CPI) averaged 55.81 Index
Points from 1960 until 2013, reaching an all time high of 231 Index Points in
June of 2013 and a record low of 4.32 Index Points in March of 1960.
In India, the Consumer Price Index or CPI
measures changes in the prices paid by consumers for a basket of goods and
services.
INDIA EXPORT PRICES
Export Prices in India increased to 223
Index Points in 2011 from 196 Index Points in 2010. Export Prices in India is
reported by the Reserve Bank of India. India Export Prices averaged 150.38
Index Points from 2000 until 2011, reaching an all time high of 223 Index
Points in June of 2011 and a record low of 100 Index Points in June of 2000.
In
India, Export Prices correspond to the rate of change in the prices of goods
and services sold by residents of that country to foreign buyers. Export Prices
are heavily affected by exchange rates.
INDIA CURRENT ACCOUNT
India recorded a Current Account deficit of
18.10 USD Billion in the first quarter of 2013. Current Account in India is
reported by the Reserve Bank of India. India Current Account averaged a deficit
equivalent to 1.51 USD Billion from 1949 until 2013, reaching the best surplus
at 7.36 USD Billion in March of 2004 and the worst deficit at 32.63 USD Billion
in December of 2012. Current Account is the sum of the balance of trade
(exports minus imports of goods and services), net factor income (such as
interest and dividends) and net transfer payments (such as foreign aid).
INDIA FOREIGN DIRECT INVESTMENT
Foreign Direct Investment in India
decreased to 1954 USD Million in May of 2013 from 2802 USD Million in April of
2013. Foreign Direct Investment in India is reported by the Reserve Bank of
India. India Foreign Direct Investment averaged 923.56 USD Million from 1995
until 2013, reaching an all time high of 5670 USD Million in February of 2008
and a record low of 58 USD Million in April of 2003.
INDIA INDUSTRIAL PRODUCTION
Industrial Production in India decreased
2.20 percent in June of 2013 over the same month in the previous year.
Industrial Production in India is reported by the Ministry of Statistics and
Programme Implementation. India Industrial Production averaged 6.99 Percent
from 1994 until 2013, reaching an all time high of 20 Percent in November of
2006 and a record low of -7.20 Percent in February of 2009. In India,
industrial production measures the output of businesses integrated in
industrial sector of the economy such as manufacturing, mining, and utilities.
INDIA GDP ANNUAL GROWTH RATE
The Gross
Domestic Product (GDP) in India expanded 4.80 percent in the first quarter of
2013 over the same quarter of the previous year. GDP Annual Growth Rate in
India is reported by the Ministry of Statistics and Programme Implementation.
India GDP Annual Growth Rate averaged 5.84 Percent from 1951 until 2013,
reaching an all time high of 10.20 Percent in December of 1988 and a record low
of -5.20 Percent in December of 1979.
In India, the
annual growth rate in GDP at factor cost measures the change in the value of
the goods and services produced in India, without counting government’s
involvement. Simply, the GDP value excludes indirect taxes (VAT) paid to the
government and includes the original value of products without accounting for
government subsidies.
INDIA FOREIGN EXCHANGE RESERVES
Foreign Exchange Reserves in India
increased to 15102 INR Billion in July of 2013 from 14760.70 INR Billion in
June of 2013. Foreign Exchange Reserves in India is reported by the Reserve
Bank of India. India Foreign Exchange Reserves averaged 4893.57 INR Billion
from 1990 until 2013, reaching an all time high of 15102.00 INR Billion in July
of 2013 and a record low of 23.86 INR Billion in June of 1991.
In
India, Foreign Exchange Reserves are the foreign assets held or controlled by
the country central bank.
The reserves are made of gold or a specific currency. They can also be special drawing rights and marketable securities denominated in foreign currencies like treasury bills, government bonds, corporate bonds and equities and foreign currency loans.
The reserves are made of gold or a specific currency. They can also be special drawing rights and marketable securities denominated in foreign currencies like treasury bills, government bonds, corporate bonds and equities and foreign currency loans.
The Reserve Bank of India is not utilizing the available resources wanted to increase the interest rate which will create and affect a common man.
The Finance Ministry is not working enough hard to increase the GDP instead wanted FDI in the Indian economy. We have enough resources available if even utilized 10% we can help the GDP to grow.
US sold 4500tons of gold few months back to
bring dollars back to their economy. It created a short fall of dollars in the
international market. The demand for dollars has been created in the
International market, we can expect soon US to buy back gold for reserves.
If US government can sell reserves for the benefit
of their economy, why can’t Reserve Bank of India do the same?
Since we have more reserve in the world than any other Central Bank. As a matter of fact INR have least possible chances to fall more than Rs 65/1$.
As a conclusion we have enough resources
only the lack of utilization of resources has created a slide in Rupee against
other currencies.
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