This will cushion the Indian economy against a possible collapse of USD. Some economists compare excessive Forex reserves to morphine shots. You don't want to become a nation dependent on them.
Look at the Economy world wide before you decide that Rupee strenghened. The fact is that most of the currencies gained against USD. The current economic situation is US not so encouraging and slowdown is expected to be continued. This is one of the main reasons why Rupee is seems to be strenghened. Ofcourse, the Indian economy is improving and making strides. RBI used to intevene in the EX mechanism for strategic reasons, Now it has every reason not to intervene
RE:Is rupee really strenghened
by Loan Shark on Oct 04, 2007 04:14 AM Permalink
US economy is actually very good. US is a developed country, so do not expect a GDP growth of 9% there as you would expect in a 3rd world (developing) country like India.
As for unemployment, it is very low at 4.5% and so is inflation - very tame despite high fuel prices. All this helped US to keep interest rates low and even lower recently due to credit crisis and mortgage defaults. Lower interest rates are not showing inflationary pressures.
All this makes, US currency unfavorable for investors and so the value of dollar is down. This is a calculated move by the US treasury. Both Snow and Polson favored a weak dollar policy. Polson even wants the Chinese to revalue their currency but China isn't playing ball.
Weak dollar means imports are expensive, more foreign tourists can come to USA and spend their money here and less Americans go to to expensive destinations in Europe.
We have to think in a global perspective, that juz in terms of Indian Rupee and US Dollar. It not a issue concerning the IT Industry. For any products say Engineering, Textiles, Agricultural Products etc if we need to be competitive in the international market we should be able to supply them cheap.
Do not forget, Indian Economy grew with the huge capital inflows from the international community and the Private sector. Only when Indian products became competitive in the International market, we got the orders for our products. and it was the effect of a devalued rupee.
Now, if the Rupee rise to a great extent, we loose our price competativeness, we cant sell our Products in the international market. Remember, we are not the only ones with the Niche products with a cheaper price, there are lots of other countries offering the same or better quality products at cheaper price that us. So if Re. continue to gain, we loose our competitiveness in the international market.
But, Re rise is great considering our Imports, eg. OIL import. Also it looks cheaper to import finished products like Laptop. But also consider that these Big Cos (Cisco,IBM,Dell or any other ....) will turn to importing products from other cos to India, than producing it in India.
It could be lethal, to loose lots of Manufacturing & low end Jobs, considering the huge population of India
yea, Its rgt u cant make rupee dwn if d Economy is growing such a fast rate , In d long run d country will benefit frm ds so the people attached to it. For Exporter the govt can increase the tenure of Tax holiday for next five years to remain competitive. And the most important thing is that Indian Exporter will hv to find ways to get the profit like , Reducing the dependence on Dollar (Focusing on EU) ......
RBI should intervene only for a limited period of time.
The IT companies & exporters must use this time not only to move up the value chain, but also to reduce their dependency on the US by creating new business opportunities with other countries.
The RBI intervention must thus be a planned move in collaboration with the Industry.
Make Your Rupee Strong !!! You can make Your rupee strong just visit to know more about it at http://myonlinecash.org and you know how strong is our rupee
In order to bear the burden of stronger rupee , exporter should try to use overseas products as their raw material and need to focus more on value addition.
1. IT sector really needs to work on the salary structure of the employees ... 2. Now-a-days call cantre salary is even more than engineers serving in the core sector companies like Reliance Energy etc. Even an MBBS doctor does not earn more than 20 K per month on employment in Govt. Job whereas person of his age earns more than 25k being in Call centre Industry. 3.Even arts graduates manages more salary compared to good engineers . 4.Rupee need to be placed very competitive to USD . This will help us for reverse brain drain thus effective and innovative people need to stay in India . 5. 90% of Engineers from IIT , NIT and REC's goes outside India for merely non value added activities . Only reason is higher conversion of currency . These institutes account for 15000 Top brains . What remain with India . The B-Segment Engineers who does not contribute much in terms of innovation .
6. How many patents People of Indian origin have . Even In abroad good engineers also work in non value added activities .
Thus my dear friends our companies need to focus on Innovation not on making huge profits on account of Cheaper manpower.
Take a case of Reliabce Industries : How much they spend on R&D Activities ... its less than 300 Crores , in a turnover of 100k crores plus .... That too for
RE:Stronger Rupee
by N.P.Sharma on Oct 03, 2007 11:23 PM Permalink
Ponit no 6 to be read as
" How many people of Indian origin holds patent in their names / Indian organisations EVEN THOUGH working abroad our engineers , technocrats are working for higher salary and low on innovation front."
RE:Stronger Rupee
by Loan Shark on Oct 04, 2007 04:17 AM Permalink
LOL .... doctors make a lot of money in India ... of course not everybody does, but those with good private practise are making a killing ... others yeah ... those who have no name recognition yet ... well, they can become plumbers ... LOL
American techie salary average rs 2 Lakh indian techie salary average rs .25 lakh (8 time less) Laptop price in USA 40000 laptop price in india 40000
rice kilo in USA $.5 rs 20 rice price in india rs 20
good quality petrol a liter in USA rs 28 worst quality petrol in india rs 54
we are developing software for less salary and buying at the cost of American price.
here we find cheap that is only non quality stuff. or technology stolen stuff. and pirated . we pay the price for most of the thing in the international price.
RE:we are developing software for less salary and buying at the cost of American price.
by on Oct 04, 2007 08:45 AM Permalink
DO u know how much rent we pay in USA... the avg. rent is $800 - 900$ for single bedroom apartment.
RE:we are developing software for less salary and buying at the cost of American price.
by prasanna kumar on Oct 04, 2007 03:14 AM Permalink
you have a point dude!!!
