rupee depreciation 2012

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Presented By

Javaid Dardarjavaid482@gmail.com

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INTRODUCTIONExchange rate: the rate at which domestic currency is

exchanged with the foreign currency.

Depreciation: a decline in the rate of exchange of one country's currency in terms of the other's due to market forces.

Indian currency (INR) has depreciated close to 22% in the last 1 year.

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ecointersect.com

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Does India need depreciating rupee?Does India need depreciating rupee?

YES or NO!

India is a net importerImports oil, gold etc.Large external debt ( 16385 billion).

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Continued Global uncertainty.

Current account deficit.

Capital account flows.

Persistent inflation..

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Interest rate difference

Lack of reforms

Black money and Corruption

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Rupee cost ofimports have increased by Rs. 65999 crore.

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IMPACT ON OIL IMPORTS IMPACT ON OIL IMPORTS http://rtn.asia/1218_indias-crude-oil-bill-rose-40

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INCREASED BURDEN ON INCREASED BURDEN ON BORROWERSBORROWERS

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IMPACT ON EXTERNAL DEBT IMPACT ON EXTERNAL DEBT Source: SEBI

DEBT(Rs billion) June-2011 Nov-2011 ChangeGovernment Debt 3525.7 4068.7 543.0Non-Government Debt 10672.5 12316.2 1643.8Total External Debt 14198.2 16384.9 2186.8

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IS DEPRECIATION BAD FOR ALL?IS DEPRECIATION BAD FOR ALL? Yes or No Effect on exporters. Effect on NRI,s Effect on those investing in foreign. Effect on IT companies.

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IS INDIA THE ONLY LOOSER?IS INDIA THE ONLY LOOSER? Source:www.x-rates.com

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What can the RBI do?What can the RBI do?

Raise policy rates

Use FOREX reserves

Ease capital controls

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POLICY RECOMENDATIONSPOLICY RECOMENDATIONSOil imports can be staggered.Encourage and increase the flow of foreign

investments into India.Invite long term FDI in infrastructure sector.Government can consider temporary import

compression.Gold imports should be restricted.Export promotion.

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