Samudraniel Dasgupta : It is very interesting that you bring up exchagne rate history before 1991. I dont know how many of you remember that time. At that time, RBI was involved in appreciating the Rupee to keep India's dollar denominated debt load managable. There was constant talk about India defaulting on its loans. Today it is just the opposite, the RBI is undervaluing the rupee. We have to ask why? When the country is stagnant, our currency depreciates and when we grow our country appreciates. This is becasue, when we grow, foreigners want to invest here, which increases the demand for rupees cause it to appreciate. It is the opposite when we are stagnant. But what exactly does the appreciating rupee mean. It means that the purchasing power of Indians is increasing. When India is growing, the productivity of the average Indian is growing. This means that an average Indian's work gives him more purchasing power in the global marketplace. This is what is reflected in the appreciating rupee! American computers, Boeing jets, crude oil etc. etc. are all cheaper. Our purchasing power is increasing, Indians are rewarded. But this will happen only when the rupee appreciates. When the RBI intervenes and undervalues the rupee, it is undervaluing the average Indian's global purchasing power. Whose side is the RBI on?
