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    Rupee Value

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    paparao
    The value of the Indian rupee is determined by market factors and demand and supply of the currency. Historically, it was linked to gold (Bretton Woods system) and later the US dollar. Recent declines in the rupee's value in 2011, 2013 and 2015 can be explained by macroeconomic factors like falling commodity prices, Chinese yuan devaluation, and India's trade imbalances. While the rupee has strengthened recently, its sustainability is uncertain given its poor performance compared to other emerging market currencies during past crises. Strengthening the rupee over the long run requires addressing underlying macroeconomic issues.

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    Rupee Value

    Uploaded by

    paparao
    17 views16 pages
    The value of the Indian rupee is determined by market factors and demand and supply of the currency. Historically, it was linked to gold (Bretton Woods system) and later the US dollar. Recent declines in the rupee's value in 2011, 2013 and 2015 can be explained by macroeconomic factors like falling commodity prices, Chinese yuan devaluation, and India's trade imbalances. While the rupee has strengthened recently, its sustainability is uncertain given its poor performance compared to other emerging market currencies during past crises. Strengthening the rupee over the long run requires addressing underlying macroeconomic issues.

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    Rupee Value (2).pptx

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    The value of the Indian rupee is determined by market factors and demand and supply of the currency. Historically, it was linked to gold (Bretton Woods system) and later the US dollar. Recent declines in the rupee's value in 2011, 2013 and 2015 can be explained by macroeconomic factors like falling commodity prices, Chinese yuan devaluation, and India's trade imbalances. While the rupee has strengthened recently, its sustainability is uncertain given its poor performance compared to other emerging market currencies during past crises. Strengthening the rupee over the long run requires addressing underlying macroeconomic issues.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    17 views16 pages

    Rupee Value

    Uploaded by

    paparao
    The value of the Indian rupee is determined by market factors and demand and supply of the currency. Historically, it was linked to gold (Bretton Woods system) and later the US dollar. Recent declines in the rupee's value in 2011, 2013 and 2015 can be explained by macroeconomic factors like falling commodity prices, Chinese yuan devaluation, and India's trade imbalances. While the rupee has strengthened recently, its sustainability is uncertain given its poor performance compared to other emerging market currencies during past crises. Strengthening the rupee over the long run requires addressing underlying macroeconomic issues.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 16

    Rupee Value: How…Why..

    And
    Where?
    The value of our Rupee has undergone
    downturn since the end of 2014 and thus is in
    doldrums of late..!
    Such shifts occurred in 2011 and 2013 too…

    Here we have the questions - of


    How? this value or exchange value is
    determined + Why does those exchange
    values undergo shifts + What are
    problems with these changes in the value
    of a currency ..?
    Bretton Woods…USA.. 1944..!
    44 countries attended
    Dollar as reserve currency.. (reason)

    Linked to Gold (called as Gold Standard)


    1 ounce of Gold (28.350 Grams)
    = $ 35
    Why Gold link?
    Age of ‘Pegged Currencies’
    Later market and global developments…
    internationally..!!!
    1)International Trade increased many fold,
    2)Gold prices rose in the open markets,
    3) US Developments( Vietnam war …welfare
    expense etc.)
    Then GOLD-DOLLAR link could not be
    sustained!!!
    Nixon Shock : 1971
    Dollar Becomes Floating currency
    ( No gold support)
    How could Dollar Retain its
    supremacy?

    Link up with UAE and


    Linking up of the Dollar and oil
    payments..!!!
    Petro Dollars…
    Our Rupees Journey …vis a vis
    Dollar..!!!
    Till 1966 in the Sterling Area ..de facto.. Though de
    jure in dollar link..

    As our trade mostly is with these countries!!

    Later things changed .. Trade shifted +


    other factors.. To follow..
    1) 1950’s-60’s industrialization,
    2) 1962 & 1965 wars,
    3) 1965-66 Draught..Inflation ..etc
    + Trade imbalance (CAD)
    rupee devalued by about 57.4%.
    As we went for foreign aid ..we have to
    liberalize our economy !!
    Later again devalued in 1991 by 59%
    +
    in 1992 rupee made partially convertible..!
    40% + 60%
    i.e 40% = to RBI of for Govt expenses at
    a fixed rate.
    60% could be converted freely at
    market value..!!
    Contd..
    Thus Rupee Linked to market and
    Demand and supply factors..
    Let us check the declines of rupee
    in 2011 & 2013 & 2015 in the
    light of this market factor..!
    -Explanation + How Rupee was
    stable during 2000-2007..
    Rupee like all currencies is linked to
    the (Fundamental) macro economy.
    2014-2015 decline of the Rupee..!

    1) Crash in commodity prices:


    As a result while currencies of commodity
    producers declined sharply-because of their
    trade imbalance
    *
    Indian Rupee benefitted through this crash of
    commodity prices..
    Thus forcing RBI to buy dollars: to keep in check
    the rise in Rupee…
    E.M currency’s movement ever since June
    2014

    Rupee lost 8.6%..!


    Where as Brazil’s Real -39%
    Malaysian Ringitt -21.8%
    S.African Rand -20%
    Thus affecting our exports and trade
    balance..!
    Reason 2: contd..
    2) YUAN devaluation by China
    (it lost 2.1% only-blown out of proportion)
    Brazil’s Real ..S.African Rand & Malaysian
    Ringitt lost between :
    4-8%
    Rupee lost only about 1.3%
    This however is not the Norm for the
    Rupee..
    Contd…
    E.M currencies movement ever since March 2009
    market lows or bears:
    Rupee then is the worst performer:
    Rupee lost 20%
    Rouble lost -41%..
    Real lost -34%
    Chinese Yuan Gained 8% ( Ever since its lows of
    2009)

    Similarly in Aug 2011 & 2013 too :


    Rupee lost as much as the E.M currencies of
    BRICS…! Excepting YUAN
    WHILE THE PRESENT RUPEE’S
    STRENGTH IS WELCOME…ITS
    SUSTAINABLIY IS
    QUESTIONABLE
    The present State of the Rupee..!

    Future prospects.!!

    How it could be strengthened!!!

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