Hello Friends,
First of all, let me accept that I am not an economist or not a technical person to explain as an expert in the subject matter. While discussion, one of my friend asked me "How rupee's value decreases?" I possess few basic knowledge and please note that I do not claim myself as an expert in the subject matter. I am explaining the thing here in a common man's language.
How Rupee value is decided and compared with other foreign currencies including dollars?
Well, there are several internal and external factors are responsible for changing value of the rupee. We often compare Rupees with other currencies mainly US $, Euro and GBP (£).
Any country's currency value depends on its economic factors as well as social factors and similar conditions globally. The value changes and it is natural however sometime the fluctuation is very high as we are seeing it today.
Following factors are responsible
Internal factors
Rate of inflation or price rise: When supply of the necessary commodities decreases, the price increases. Supply decrease can happen due to several reason like black marketing (happens mostly in our country), excess storage, poor logistic and short supply. Sometime due to weather condition also, we feel short supply. Due to this, the purchase power of money becomes weak and people have to pay higher price resulting in weakness of currency.
Printing of money: Yes, this is true that government through Reserve Bank of India (RBI) prints money for its expenditure requirements. The expenditure includes on public welfare, various schemes etc. However, this printed money can be spent in India/ within country only (in some cases to Nepal and Bhutan also). However, government cannot pay in Indian currency for its foreign purchases. This also means not that government can print whatever money they want- they cannot. The money has to be printed on the basis of economical growth of the country otherwise the money becomes nothing more than the paper. Government also print money based on the assumption of future economic growth but sometime, unfortunately growth does not happen as expected. For example, our chor lootera government expected GDP of 9% per year. Currently it is expected to be at 4.8% in this quarter which is much lower.
External factors
Import and export: For any country, to hold more value of the currency, its export should be always higher than the import and if import remains higher, it affects value of the currency.
Foreign exchange reserve
A country should have reserve of foreign exchange which should be accepted globally. If we see now, US dollar is accepted widely so Euro and Pound. If our expenditure of foreign currency increases, it impacts on forex reserve and if the same forex has more demand globally, it prices increases. Here, again it is matter of demand and supply.
Investment in the country
When a country has economic stability, its share market booms, it allow foreign investment and when the foreign investor see/ get confidence that they will get more return by investing in that particular country, they invest and if the invested money used properly and economic condition remains stable, then the value of currency also remains stable but as soon as other country's economic become stronger and those foreign investor feel insecurity in the investment, they pull out their money. This result into the crisis and falling of currency value.
These are the few factors that I have understood and realised. For India, the reason for Rs. fall remains the same
1. Dollar has become stronger. US was going through a tough economic conditions, unemployment etc but it has slowly improved the conditions so the dollar has become strong.
2. Euro zone (european union countries) were in very bad economic condition but now they have also started recovering.
3. To improve economic condition of the nation, government could do nothing. From Kalmadi to Raja, CMs to PM and Gandhis all were ready in making money for them so they least bothered about corruption and image. After honourable supreme court's intervention, all these scams exposed and companies as well as investors lost interest in India for investment. This has derailed economic growth.
4. Inflation beat at all time high. Vegetables which was hardly Rs. 20 per KG last year have touched average 50 Rs. per KG. This has decreased purchasing power of rupee so it has become weak.
5. GDP: Our GDP fluctuated every time and the government miserably failed. If we see the data since 2008, it is as follows:
Year GDP %
2008 3.9
2009 8.5
2010 10.5
2011 6.3
2012 3.2
So except 2009 and 2010, we never achieved the government's "dream figure"
I cannot confirm the report but on social network, there is even rumours or message that every time the election come nears, our rupee falls because politician park those money to tax havens and many corporates shows fake export to bring those money to turn white for their personal growth. It can be true as well as false.
solution
We have to be self reliant and to be depend on our domestic product maximum i.e. Swadeshi. They do not have much money to spend on fancy advertisement but they are definitely good in the quality.
I got one such mass mail and I believe also (I do not promote Ramdev, you can buy any indigenous product from companies like Dabur to Godrej, Parle to Lijjat, Ghadi to any other brand). You may refer following chain mail I got
What you can do about it?
1. Buy only products manufactured by WHOLLY INDIAN COMPANIES.
2.You don't need to give-up your lifestyle. You just need to choose an alternate product.
All categories of products are available from
WHOLLY INDIAN COMPANIES.
LIST OF PRODUCTS
COLD DRINKS:-
DRINK LEMON JUICE, FRESH FRUIT JUICES, CHILLED LASSI (SWEET OR SOUR), BUTTER MILK, COCONUT WATER, JAL JEERA, ENERJEE,and MASALA MILK...
INSTEAD OF COCA COLA, PEPSI, LIMCA, MIRINDA, SPRITE
BATHING SOAP:-
USE CINTHOL & OTHER GODREJ BRANDS, SANTOOR, WIPRO SHIKAKAI, MYSORE SANDAL, MARGO, NEEM, EVITA, MEDIMIX, GANGA , NIRMA BATH & CHANDRIKA
INSTEAD OF LUX, LIFEBUOY, REXONA, LIRIL, DOVE, PEARS, HAMAM, LESANCY, CAMAY, PALMOLIVE
TOOTH PASTE:-
USE NEEM, BABOOL, PROMISE, VICO VAJRADANTI, PRUDENT, DABUR PRODUCTS, MISWAK
INSTEAD OF COLGATE, CLOSE UP, PEPSODENT, CIBACA, FORHANS, MENTADENT.
TOOTH BRUSH: -
USE PRUDENT, AJANTA , PROMISE
INSTEAD OF COLGATE, CLOSE UP, PEPSODENT, FORHANS, ORAL-B
SHAVING CREAM:-
USE GODREJ, EMAMI
INSTEAD OF PALMOLIVE, OLD SPICE, GILLETE
BLADE:-
USE SUPERMAX, TOPAZ, LAZER, ASHOKA
INSTEAD OF SEVEN-O -CLOCK, 365, GILLETTE
TALCUM POWDER:-
USE SANTOOR, GOKUL, CINTHOL, WIPRO BABY POWDER, BOROPLUS
INSTEAD OF PONDS, OLD SPICE, JOHNSON'S BABY POWDER, SHOWER TO SHOWER
MILK POWDER:-
USE INDIANA, AMUL, AMULYA
INSTEAD OF ANIKSPRAY, MILKANA, EVERYDAY MILK, MILKMAID.
SHAMPOO:-
USE NIRMA, VELVETTE
INSTEAD OF HALO, ALL CLEAR, NYLE, SUNSILK, HEAD AND SHOULDERS, PANTENE
MOBILE CONNECTIONS:-
USE BSNL, AIRTEL , RELIANCE .
INSTEAD OF Vodafone
Food Items:-
Eat Tandoori chicken . home made food
INSTEAD OF KFC, MACDONALD'S, PIZZA HUT, A&W
Every INDIAN product you buy makes a big difference. It saves INDIA. Let us take a firm decision today.
BUY INDIAN TO BE INDIAN...
EVERY TRUE INDIAN WILL SHARE IT?
Thanks For Spending your valuable time .....
I ve done my duty Will U???
________________
Thanks for reading
First of all, let me accept that I am not an economist or not a technical person to explain as an expert in the subject matter. While discussion, one of my friend asked me "How rupee's value decreases?" I possess few basic knowledge and please note that I do not claim myself as an expert in the subject matter. I am explaining the thing here in a common man's language.
How Rupee value is decided and compared with other foreign currencies including dollars?
Well, there are several internal and external factors are responsible for changing value of the rupee. We often compare Rupees with other currencies mainly US $, Euro and GBP (£).
Any country's currency value depends on its economic factors as well as social factors and similar conditions globally. The value changes and it is natural however sometime the fluctuation is very high as we are seeing it today.
Following factors are responsible
Internal factors
Rate of inflation or price rise: When supply of the necessary commodities decreases, the price increases. Supply decrease can happen due to several reason like black marketing (happens mostly in our country), excess storage, poor logistic and short supply. Sometime due to weather condition also, we feel short supply. Due to this, the purchase power of money becomes weak and people have to pay higher price resulting in weakness of currency.
Printing of money: Yes, this is true that government through Reserve Bank of India (RBI) prints money for its expenditure requirements. The expenditure includes on public welfare, various schemes etc. However, this printed money can be spent in India/ within country only (in some cases to Nepal and Bhutan also). However, government cannot pay in Indian currency for its foreign purchases. This also means not that government can print whatever money they want- they cannot. The money has to be printed on the basis of economical growth of the country otherwise the money becomes nothing more than the paper. Government also print money based on the assumption of future economic growth but sometime, unfortunately growth does not happen as expected. For example, our chor lootera government expected GDP of 9% per year. Currently it is expected to be at 4.8% in this quarter which is much lower.
External factors
Import and export: For any country, to hold more value of the currency, its export should be always higher than the import and if import remains higher, it affects value of the currency.
Foreign exchange reserve
A country should have reserve of foreign exchange which should be accepted globally. If we see now, US dollar is accepted widely so Euro and Pound. If our expenditure of foreign currency increases, it impacts on forex reserve and if the same forex has more demand globally, it prices increases. Here, again it is matter of demand and supply.
Investment in the country
When a country has economic stability, its share market booms, it allow foreign investment and when the foreign investor see/ get confidence that they will get more return by investing in that particular country, they invest and if the invested money used properly and economic condition remains stable, then the value of currency also remains stable but as soon as other country's economic become stronger and those foreign investor feel insecurity in the investment, they pull out their money. This result into the crisis and falling of currency value.
These are the few factors that I have understood and realised. For India, the reason for Rs. fall remains the same
1. Dollar has become stronger. US was going through a tough economic conditions, unemployment etc but it has slowly improved the conditions so the dollar has become strong.
2. Euro zone (european union countries) were in very bad economic condition but now they have also started recovering.
3. To improve economic condition of the nation, government could do nothing. From Kalmadi to Raja, CMs to PM and Gandhis all were ready in making money for them so they least bothered about corruption and image. After honourable supreme court's intervention, all these scams exposed and companies as well as investors lost interest in India for investment. This has derailed economic growth.
4. Inflation beat at all time high. Vegetables which was hardly Rs. 20 per KG last year have touched average 50 Rs. per KG. This has decreased purchasing power of rupee so it has become weak.
5. GDP: Our GDP fluctuated every time and the government miserably failed. If we see the data since 2008, it is as follows:
Year GDP %
2008 3.9
2009 8.5
2010 10.5
2011 6.3
2012 3.2
So except 2009 and 2010, we never achieved the government's "dream figure"
I cannot confirm the report but on social network, there is even rumours or message that every time the election come nears, our rupee falls because politician park those money to tax havens and many corporates shows fake export to bring those money to turn white for their personal growth. It can be true as well as false.
solution
We have to be self reliant and to be depend on our domestic product maximum i.e. Swadeshi. They do not have much money to spend on fancy advertisement but they are definitely good in the quality.
I got one such mass mail and I believe also (I do not promote Ramdev, you can buy any indigenous product from companies like Dabur to Godrej, Parle to Lijjat, Ghadi to any other brand). You may refer following chain mail I got
What you can do about it?
1. Buy only products manufactured by WHOLLY INDIAN COMPANIES.
2.You don't need to give-up your lifestyle. You just need to choose an alternate product.
All categories of products are available from
WHOLLY INDIAN COMPANIES.
LIST OF PRODUCTS
COLD DRINKS:-
DRINK LEMON JUICE, FRESH FRUIT JUICES, CHILLED LASSI (SWEET OR SOUR), BUTTER MILK, COCONUT WATER, JAL JEERA, ENERJEE,and MASALA MILK...
INSTEAD OF COCA COLA, PEPSI, LIMCA, MIRINDA, SPRITE
BATHING SOAP:-
USE CINTHOL & OTHER GODREJ BRANDS, SANTOOR, WIPRO SHIKAKAI, MYSORE SANDAL, MARGO, NEEM, EVITA, MEDIMIX, GANGA , NIRMA BATH & CHANDRIKA
INSTEAD OF LUX, LIFEBUOY, REXONA, LIRIL, DOVE, PEARS, HAMAM, LESANCY, CAMAY, PALMOLIVE
TOOTH PASTE:-
USE NEEM, BABOOL, PROMISE, VICO VAJRADANTI, PRUDENT, DABUR PRODUCTS, MISWAK
INSTEAD OF COLGATE, CLOSE UP, PEPSODENT, CIBACA, FORHANS, MENTADENT.
TOOTH BRUSH: -
USE PRUDENT, AJANTA , PROMISE
INSTEAD OF COLGATE, CLOSE UP, PEPSODENT, FORHANS, ORAL-B
SHAVING CREAM:-
USE GODREJ, EMAMI
INSTEAD OF PALMOLIVE, OLD SPICE, GILLETE
BLADE:-
USE SUPERMAX, TOPAZ, LAZER, ASHOKA
INSTEAD OF SEVEN-O -CLOCK, 365, GILLETTE
TALCUM POWDER:-
USE SANTOOR, GOKUL, CINTHOL, WIPRO BABY POWDER, BOROPLUS
INSTEAD OF PONDS, OLD SPICE, JOHNSON'S BABY POWDER, SHOWER TO SHOWER
MILK POWDER:-
USE INDIANA, AMUL, AMULYA
INSTEAD OF ANIKSPRAY, MILKANA, EVERYDAY MILK, MILKMAID.
SHAMPOO:-
USE NIRMA, VELVETTE
INSTEAD OF HALO, ALL CLEAR, NYLE, SUNSILK, HEAD AND SHOULDERS, PANTENE
MOBILE CONNECTIONS:-
USE BSNL, AIRTEL , RELIANCE .
INSTEAD OF Vodafone
Food Items:-
Eat Tandoori chicken . home made food
INSTEAD OF KFC, MACDONALD'S, PIZZA HUT, A&W
Every INDIAN product you buy makes a big difference. It saves INDIA. Let us take a firm decision today.
BUY INDIAN TO BE INDIAN...
EVERY TRUE INDIAN WILL SHARE IT?
Thanks For Spending your valuable time .....
I ve done my duty Will U???
________________
Thanks for reading
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