Guys, I see 3 affects of the weakening dollar. 1] Cost of petrol going down. I dont think this will affect the consumer. When the price was rising, the govt. kept the prices pretty steady. Why should they decrease the prices now? 2] Exporters/IT/BPO firms taking a hit - Though the profits of infosys and wipro are small compared to India's oil bill, my point is that these companies generate thousands or even lakhs of jobs - which gives the economy a push. And which is really vital. I would assume that to keep up profits, companies would resort to layoffs. The third thing I see no one has talked about in this forum, is the forex reserves that India has, and the US govt. debt that India has bought. Remember, these amounts are huge and all are in USD. A depreciating dollar also means that India's forex reserves depreciate and the debt instruments earn less. I am into IT, working in the US, but if the rupee rise is good for India, I would gladly accept my loss as a small gift to my motherland.
RE:Rising Rupee, does it hurt us ?
by Samudraniel Dasgupta on Jul 25, 2007 11:34 PM Permalink
India's forex reserve should consist of a basket of currencies and Gold.When any currency weakens, the dealers at RBI shift the currency position. A USD depreciation, therefore, might not have harmed our reserves to a great extent. However,a rising rupee and a robust forex reserve are much better than what we had experienced in 1991 when India had to pawn gold with Bank of England and the forex reserve was less than one Billion.
Yes customised service by software Industry is Fetching dollars. But may be if our software Giants who now have their world presence recognised. Rather than targetting Low cost we can Sell Branded softwares. Americans are impressed by hype. They easily get carried out by orchastrated hype. Any contradictors?
RE:Branded service
by srinu reddy on Jul 26, 2007 10:24 AM Permalink
ask anybody in USA about indian companies,then you will come to know ,the companies presence.tell me one product indians companies invented,which is being used around the world.only cost advantage is fetching software contracts to india.dont live in hype.the moment cost advantage is gone,all the companies will shut their offices in INDIA.
We must concentrate on tourism to compansate for the losses in Exports. If we build better Infrastructure to attract tourist, this industry has much greater potential than any other sector. India has the largest number of tourist spots than any other country. However this potential remains unutlised due to lack of Hygiene, poverty, filthy conditions, improper maintenance of some of world known sites do not attract foreign tourist. Let rupee take its own course. We must learn to compete & improve conditions on warfooting. Lack of political will might hamper the prospects but Indians will move forward & compell our politicians to implement projects when it becomes a question of survival.
RE:Stronger Rupee
by Shriniwas Deshpande on Jul 25, 2007 10:35 PM Permalink
Americans sell anything after attaching story or hyping the product like Pepsi or coke. They label it as quality product. Why our software industry couldnot prepare a branded product/s?
RE:Stronger Rupee
by Amit Solanki on Jul 26, 2007 03:47 AM Permalink
Sriniwas, your point is very valid. All our software industry has highest talent in world. But still most of them are doing only Service, service and service. Just like sofisticated majoors....Why can't we develop brands of s/w products and patent it and sell accross world? That would increase india's income a lot...and also jobs...
RE:Stronger Rupee
by srinu reddy on Jul 26, 2007 10:30 AM Permalink
just one example: if i want buy an ipod,i just buy it.eventhough its made in china,because its apple product i buy it.because in first world country the safty standards and customer server are high.if i wanna buy third world country produt i have to think 10 times before buying.india may become developed country ,but the customer service you will never get like USA.
'When the govt. spends tax rupees to artificially undervalue the rupee, it is transferring wealth from those who are not involved in the export sector to those who are'....Well Said Vijay Natrajan
RE:Well Said Vijay Natrajan
by Dinesh Nagaraju on Jul 25, 2007 10:38 PM Permalink
yea..thats a good one...didnt knew it was like that...govt supporting $ with our tax money...thats like instant 33% gain for an exporter...some of the things arent very clear/apparent in India...hard to find such information any where either...unless it burns our ass we dont bother to understand how things work...
Jayaraman, Suresh : Excellent comments. We should let the market work. Let the value of the rupee be determined by the market. 40 years of socialist planning has shown us the govt. planning and control can only lead to disaster. Let the market work and let the Indians get richer!
Guys the question is rupee really rising? In global market it is the dollar which is weakning. If rupee was rising it shld have gained against other currencies like Euro.
RE:Is rupee rising or dollar depreciating?
by Vinit Sankhe on Jul 25, 2007 09:42 PM Permalink
But prashant isnt that already happening. Consider 1 great Briton pound ?. It was Rs. 82 6 months back. Now its Rs. 78.5.
RE:Is rupee rising or dollar depreciating?
by Natarajan Vijay on Jul 25, 2007 09:25 PM Permalink
Prashant : What is happening is that India's terms of trade with respect to the US is improving i.e. we get more goods/services/assets from the US than we give them. The US dollar is not necessarily weakening. There is plenty of capital inflow into the US, the interest rates in the US is pretty low and inflation is very low and US productivity is moderately increasing. What is happening is the the RBI is undervalueing the rupee by paying more than the market rate. It used to undervalue even more at Re45=$1. But it is now undervalueing it less at Re40=$1. I would arge that they should just let it float. The fact that the Re is strengthening is in effect a vote of confidence from the rest of the world to India that they think that the INdian economy will grow and that the Indian govt. will control inflation of the Re. It is a good development in general!
RE:Is rupee rising or dollar depreciating?
by sudhanshu singh on Jul 25, 2007 10:01 PM Permalink
You r right prasant, dollar is weaking against all curriencies. Here in Phillippines, two years back one dollars can fetch you 56 peso but now only 45 peso. The only solution is to look for the other countries to do business but unfortunately for Indians the USA is synonemous to the whole world. And if we avoid diversing our business in to other areas, we will pay the price. Another major attack by Al queda or muslim terrorists in USA like 9/11 and you will see dollars coming down to 30 rupees. What will we do then? So let the exporter make all hue and cry,but donot pay much heed to their demand for subsidies. They are in business and of course have a good calibre. They will ultimately find many ways reduce their dependence on US dollars. Other wise it will be like millions of rupees going to fertilizer subsidy for private companies using Neptha based technology while they can change easily to gas based low cost production technology. But when they are getting huge subsidy from govt in the name of farmer why will they change?
RE:Conclusion
by Shriniwas Deshpande on Jul 25, 2007 09:54 PM Permalink
he had plan. Did he have the blueprint? I have not read how he was planning the execution.
Indian Economy is not only dependent on software Industries.we import a lot than export Our crude oil import(INR 170000 Crores) is much more than the combined export of WIPRO,INFOSYS, SATHYAM,TCS and few software majors. so i feel we no need to worry about dollar weakening against Indian Rupee. From 1200 crore net profit if 10-15% is reduced for INFOSYS why RBI should bothered. Let govt improve small scale and local Insustries and supply quality products to Indians. Let Salaried class of people of India go abroad for leisure travel and do see the world and enjoy life like Americans and europeans.why always govt wants our people to go abroad as cheap labours and work and send money back with higher conversion USD=Rupee. These software companies have made indian engineers lethargic and lazy. Now every techie wants to sit on system and get high salary. No one is interested in R&D , production, Sales/Service. Thsi trend has to change for better development of our economy and inflation.
RE:RUPEE SHOULD ALWAYS BE STRONG.....
by kris on Jul 25, 2007 09:31 PM Permalink
Jay
why accuse IT companies??
Govt. has done nothing to promote IT, they are on its own( like becuase of English speaking people, most of the govt. school or regional langauge as medium of instruction)
If other sectors pay well, like advertising,pharma,oil etc, people will go there to work. when it comes to the employee distribution, IT is nothing.
people will go where there is money. People will leave IT easily, if they get better pay in Muncipality as well.
Finally, it's money that's calling the shots. Indian engineers are not lethargic or lazy, if you don't believe this, then check the Indian presence and capabilities in NASA, MIT, ISRO,GE, BOSCHE, BHEL, Caterpiller, Carrier... etc.
RE:RUPEE SHOULD ALWAYS BE STRONG.....
by Rohit Maiya on Jul 25, 2007 10:39 PM Permalink
Got has done a lot initially to promote IT. They got tax holidays, got lot of lands fro cheap rices and sometimes free of cost. A lot of SEZs are still occupied by these IT companies. Now that they have grown, they should not bother too much about the strong rupee.
RE:RUPEE SHOULD ALWAYS BE STRONG.....
by harish dayanand poojari on Jul 25, 2007 09:13 PM Permalink
i appreciate your thought though i work in IT. its very imp that india concentrates on lot many other areas than only IT.
RE:RUPEE SHOULD ALWAYS BE STRONG.....
by Vinod A on Jul 25, 2007 09:23 PM Permalink
Hi Jayaram, I do appreciate ur thinking. But could you let me know the great R&D work that the other Non-IT people seems to have managed in India?
RE:RUPEE SHOULD ALWAYS BE STRONG.....
by Sumit De on Jul 25, 2007 10:32 PM Permalink
You should be aware Vinod that India has really made huge progress in the feild of Micro biology and Pharma, it has huge impact on fertilizer industry R&D, more over the water sector in India is booming like anything, people are giving more thought for treatment of Water and Wastewater as these are not importable items, all these are non IT feilds, just u have to look around
RE:RUPEE SHOULD ALWAYS BE STRONG.....
by Ajay on Jul 25, 2007 09:31 PM Permalink
For sure, Indian should be able to travle overseas and enjoy life. Stronger dollar is better for the country.
Also i do not believe a 10% appreciation would have a major impact on the bottom line of IT service providers. As their revenue would decrease they would either pay lesser salary and increase productivity with smaller bench or longer hrs with each employee working multiple clients. This might impact medium end end property prices but nothing the economy cannot work over.
The smaller exporter will be affected and FDI for export oriented units will decrease. Well, eventually India will have to develop it's own market and India for large extent is a self driven market.
My concen for inda are more on the socio-politcal in nature. i worry about corruption, rule of law, income disparity and size of population.
Provided we can take care of these factors Re /- will work itself.
RE:RUPEE SHOULD ALWAYS BE STRONG.....
by on Jul 25, 2007 10:10 PM Permalink
good comments. Let the rupee stabilize by itself. Hopefully the inflated housing markets in leading cities might cool down to realistic levels thx to the dollar weakening.
look at tech cos. they have been focussing mostly in US. They will now be forced to do technology work in our country itself, thereby strengthening the Indian Economy. You want mangoes the best goes overseas, you want garments the best goes overseas, you want technology, go overseas and get back the same indian technology.. funny isnt it. now it is payback time for India. Otherwise in normal course no infosys,satyam or wipro would ever focus on India itself because of low margins compared to US and other economies. Because the nature of business is to be commercial. Now the ruppee may change all that.
RE:rupee appreciation is good
by on Jul 25, 2007 10:18 PM Permalink
well said, And would like also to add that our dear own Desi Software giants whould learn from company like IBM..who is getting so many projects from INDIAN Vendors.. IBM has nearly $2 billion contract with Bharti and then nearly $1 billion from Celluar and some more from even govt deptt.. Our Desi Software giants should not under estimates the stregth of other indian companies. They can provide cheap services to India companies as compare to MNCs. Like wise we can explore our own coutries business than exploring the business in world and then at the end suffer losses due to Rs appreciation.
The rise of rupee is badly affecting us,who are living in foreign countries just to earn money. Now we are paying more to convert it to Rs. For eg, as im living in dubai i used to send Rs.10k for Dhms825-830.But now am paying Dhms920 to convert it to Rs10k.
RE:It affects the NRIs
by Natarajan Vijay on Jul 25, 2007 09:13 PM Permalink
Jothi, Go back to India! We cannot spend Indians's tax money to keep you rich.
