All these repeated articles about the dangers of rising rupee on REDIFF really smells fishy. Does it have a conflict of interest? I wonder if it gets most of its revenue in $$ OR Re. If it is getting $$ from the expatriate community, it would make a lot of sense for them to hype this issue.
RE:REDIFF has a conflict of interest!!
by Natarajan Vijay on Jul 26, 2007 08:03 PM Permalink
Guys, I am right. REDF indeed has a conflict of interest. Their shares trade on NASDAQ with Ticker REDF. They have reported results today. THey have net income of $2.31 million. However, their income is down $440,000 due to exchange rate effects. Their stock is down nearly 16% today on this news. So REDF is promoting the idea of debasing our currency using tax money collected from all indians to make their bottomline look good!!!
RE:REDIFF has a conflict of interest!!
by kumar on Jul 26, 2007 08:30 PM Permalink
how do they use tax money collected from all indians to do that. i am so confused how this happens.
RE:RE:REDIFF has a conflict of interest!!
by Natarajan Vijay on Jul 26, 2007 09:16 PM Permalink
Kumar, this is how it happens. Lets take a closer look. For e.g., let us assume that if the RBI were to let the rupee float, then the exchange rate would be Re30=1$ (I dont know what it will be exactly, only that it will lower than the 40Re now). What the RBI is currently doing is paying greater than the market rate i.e. it paying Re40 instead of Re30 to those who sell their dollar. It is this a Re10 discount to dollar sellers. It is in effect a Re10 discount to buyers of Indian software services in the US and Infosys/Wipro get the benefit of this discount int he form of greater profits. But where does that Re10 come from? The govt. either pays it out from tax money or just prints this money. If it pays it out in tax money, this money comes from all Indians, whether they are involved in exports or not. For e.g. doctors dont export their services but they pay taxes so do bus drivers, retails business owners etc etc. The govt. thus taxes all Indians for the benefit of those in the export sector. (The conclusion is the same if the govt. prints the money, the tax is in the form of inflation). This is really stupid. Why should the govt. rob the poor bus driver and pay it to the rich Narayana moorthy and the rich software engineers!! Let the market do its job!
RE:REDIFF has a conflict of interest!!
by Tarak Chatterjee on Jul 26, 2007 09:31 PM Permalink
We may be missing out on one thing - India does huge amount of imports too. One important thing for a stronger economy is to have (export minus import ) = a positive value. If exports value fall the value will not remain positive for long - resulting in huge trade deficits, as one has to buy (import) using $ or Euro.
RE:RE:REDIFF has a conflict of interest!!
by Natarajan Vijay on Jul 26, 2007 09:42 PM Permalink
Why would we want to export more than import? When you go grocery shopping, do you pay Re10 to Re5 value of goods? Imports is what we consume, exports is what we pay for what we consume. When imports are greater than exports, it means that foreigners are using Rupees to buy Indian stocks and bonds instead of Indian goods i.e. they are investing here, which is good. Investment creates jobs and causes the economy to grow.
RE:REDIFF has a conflict of interest!!
by Manas Panda on Jul 26, 2007 09:28 PM Permalink
this is really a very stupid comment. I think U have a conflict of interest... do u sell rupees to get dollars? Moreover you DO NOT understand ECONOMICS at all..otherwise U would not have made a blatant comment like this full of ignorance. Go read the basics of economics ...I do not need to explain why the article is meaningful ...
RE:REDIFF has a conflict of interest!!
by Manas Panda on Jul 26, 2007 09:51 PM Permalink
Just to add All those people who are saying a 30inr/$ will increase you purchasing power ..here are some things that will actually happen.. 1- 1/2 of the people will lose jobs and People will stop getting hikes [the purchasing power of people will infact go down and heads will roll] 2- Indian and Chinese economy is still a fraction of US mammoth and dependent so much on US money (Check WB/IMF) Figures. 3-Check why the Chinese Govt is controlling their currecy (BTW US wants both Yuan and INR to appreciate a lot such that JOBS and competitiveness will move back to America and Asia will move back to its age old begging days. US is in fierce fight with the Chinese on this issue) 4-Economics will takes its way but a sudden INR appreciation [Not giving time for businesses to adjust/react/productivity increase] will see many other lethal harms which you will see sooner or later.
RE:REDIFF has a conflict of interest!!
by Natarajan Vijay on Jul 27, 2007 12:02 AM Permalink
Manas, "1- 1/2 of the people will lose jobs and People will stop getting hikes [the purchasing power of people will infact go down and heads will roll] ". There will be labor reallocation to different sectors of the economy based on India's strengths. But there will not be a net decline in unemployment. For e.g. when India opened up 1991, this began a major reallocation of labor from agriculture to other sectors fo the economy such as manufacturing and services. This was indeed tough for the people involved but it was for the overall good. There is economic theory and no practical data to prove that exchange rates affect overall unemployment. "2- Indian and Chinese economy is still a fraction of US mammoth and dependent so much on US money (Check WB/IMF) Figures." What WM/IMF figures? Dollar bills are green pieces of paper. We cannot eat dollar bills or live in them. What matters is India's productivity, which will improve when the Govt. keeps its hand off the market! "Check why the Chinese Govt is controlling their currecy (BTW US wants both Yuan and INR to appreciate a lot such that JOBS and competitiveness will move back to America and Asia will move back to its age old begging days. US is in fierce fight with the Chinese on this issue)" If currency manipulation is so important, why does the US not manipulate its currency. Again, what matters is how productive we are. We cannot grow the country by manipulating the currency!
RE:REDIFF has a conflict of interest!!
by Hans Solo on Jul 27, 2007 04:20 PM Permalink
Natarajan, u r fed with this stupid logic that a "Stronger Rupee means Stronger Indian Economy" There are many countries whose currency is stronger than USD but doing no good and there are countries (like Japan) who had strong economy but their currency is wat 1USD = 900yen?
RE:REDIFF has a conflict of interest!!
by Natarajan Vijay on Jul 27, 2007 10:04 PM Permalink
Mr. Solo, You are confusing nominal and real exchange rates. Japan has a strong currency BTW.
