thats really bad news for Indian exporter who are earning in $$$. Before some months back $1=Rs.47 but now continue decreasing ....today rate is $1=Rs.40.90 Its all due to huge cashflow of dollars in India. It is difficult to get back $1= Rs.47 this year. All exporter are in big loss. But just think if dollar continues falling and come to $1=Rs.1 ???? Den what happened? lol
Well, then imported good will be super cheap which is cool. I guess if that happens, people will be using NRI to trade rather that the US$. But seriously, you can accept payments in a currency other than US$.
The USD has not increased in value against INR. The Indian Rupee has become stronger against the USD. If USD has increased in value we would have got about INR45-46 per USD but now we get INR40-41 per USD. The Indian Reserve Bank is taking steps to stabilize the situation because Indian exporters are complaining.
It's a bad news on the export side, but a terrific one on the import side. Those who expect payment in USD, will definitely have to sit and cry. Altogether, it's a rising trend and people need to get happy with it. Did you know that, the current exchange rates and the rise of the rupee or the falling value of the USD has made india a "Trillion Dollar Economy" ? Allow me to explain; India's GDP for the year 2006-2007 is Rs 41,00,000 crore. If you go by the current exchange rates. That translates to something a little over than $1 trillion. Foreigh exchange, as a whole, is affected by many other reasons. The thing is to go behind the reasons of this downfall of the dollar. I read somewhere that, if experts are to be believed, this is what is termed as a Skillful management of the Dollar. Economists state that this gradual fall of the dollar, makes US exports competitive. Example - Let's say yesterday's value was $1 = 40 INR and today it comes down to $1 = 20 INR. So for the India Importer, what costed 40 Rupees earlier would cost only 20 Rupees. If his spend is 400 Rupees, earlier he received 10 units (40 x 10 )for that amount, now he receives 20 (20 x 20). The exporter, in the US, however earlier received orders worth $10, now receives $20 and exports 20 units. So in voluntary terms, his exports have increased. (Note the above scenario is imaginary and doesn't include inflation and other generic factors) This, however, is bad news for Indian Exporters (us) - Those who exports goods/services from India and receive payment in US Dollars. So earlier we received $1000 for a project and received Rs. 40,000, now we receive 20,000. And it's not like, stuff here is priced cheaper. Ofcourse, the imported goods are cheaper, but that's nominal. And it's not like we are not facing Inflation in India. So the problems begin for us. The reason being, dependency on another country's currency. Ironically, it was us, the software sector which played an important role in building India's foreign reserve. And now as the rupee appreciates against the dollar, our profitability margin is hindered. Now, it's over to the RBI, to control Inflation or to manage the Rupee (skillfullu ) Hope my explanation was useful. Abhishek
I am also worried too with the rates going down quickly. But its good that the value of Rupee is strengthening.
Excellent post. I think this bad for all of us and also businessmen. I hope rate should be up in next 2 or 3 months.