Appreciating Rupee

[krantikari]

Well, I am surprised no one has posted this one yet...
The strengthening Rupee brings mixed reactions... What about you? Happy or Unhappy?

[marvelous]

It has nothing to do with posting like this thread or an indian economy

The rising petrol prices and fallimg stock market is sort of putting pressure on the ruppe. But i guess this is a short term trend and Rupee will appriciate against the dollar soon. this is becoz of the rising fiscal deficit in the US which runs into trillions of dollars.

seriously, I dont know. I guess I can never understand the how money market works!

[krantikari]

I have heard reports that state that he equation may become 35:1 and stay there. I am not sure myself though. So I guess I want to know from people who are familiar with the dynamics of the flow of money.

[krantikari]

http://economictimes.indiatimes.com/...ow/1919265.cms

[krantikari]

http://asia.news.yahoo.com/070418/3/30i3q.html

[krantikari]

Looks like nobody is really bothered about this issue.

[krantikari]

http://forex.gftforex.com/public/item/150876

Indian Rupee Headed For Fourth Straight Montly Gain in Forex Trading
Rupee among the strongest emerging market currencies
The Indian rupee is expected to continue to make gains in currency trading on the FX market. It is headed for a monthly gain for the fourth straight month in forex trading, and likely to rise further. Bloomberg reports on the gains posted by one of the strongest emerging market currencies:


``The rupee should rise in the near term as there is no reason why flows from abroad will reverse,'' said Arun Kaul, treasurer at state-owned Punjab National Bank in New Delhi. ``The strong growth shows India has capitalized well on its resources and justified the capital inflows.'' ...

Global funds bought more Indian equities than they sold on all but three days this month through Nov. 28, according to the Securities and Exchange Board of India. They purchased a net $8.81 billion so far this year, compared with $10.7 billion for the whole of 2005, a record.

``Sentiment on growth will remain bullish in the near term and continue to attract more inflows,'' said Parthasarathi Mukherjee, treasurer at UTI Bank in Mumbai. ``That should help the rupee rise further.''

[echarcha]

On one hand I am happy that Indian rupee becomes strong. Good.
On the other hand I have extremely selfish motives to let rupee slide against the dollar. I send some money to my mom ever so often. I want her to get maxmum rupees for the dollar. I know I know about buying power etc. But for my mom, its better if she receives more rupees to the dollars.

If rupee strengthens, the export market will be affected. Also IT services will become expensive and many US firms might want to try cheaper destinations like East Europe.

[ShivSainik]

This could be disaster for indian IT firms. Their model depends on large difference between rupee and $$$. Imagine the effect on IT co.s if ratio goes to 35:1. Its a straight 20% loss from current situation. I know big cos have existence all over, but many co.s highly depend on US market, and appreciating rupee will kill them. Also these co.s are facing danger of increasing taxes from central govt. as they enjoyed juicy tax benefits all these years.

[tantric_yogi]

I thought this thread was about "appreciating" as in hugging and kissing rupee notes.

Late last week I was honored to have dinner with couple of business families. As is whith these rich business people ... they talk lot of shit and non-sense about matters related to money ... giving least regard to poor fax-operator from Jummritalaiay sitting there trying to make some cents out of their dollar talk.

Here is what I gathered ...

1. Its not the ruppe which is appreciating ... its the dollar losing its value.

2. I did not understand this part ... but ... appreciating ruppe (due to depreciating dollar) is not good for Indian exporters (and or importers). I think for the exporters cause their products will be more expensive or they get less ruppe in payment?

3. I forgot the rest.

[HarHarMahaDev]

Why is the rupee appreciating?

- high interest rates set by the RBI
- Stricter lending policies...that curbs credit...which means lower money supply.

Good.

But somethings gotta give...

Its just like...you are stopping the flow of money. Unless that flow is replaced by something else (foreign institutional investos, NRIs, etc)...it is going to show up in one of these places:

- A real estate bust (which is very very likely)
- stock market collapse (very likely too)

Why I think a stock market collapse is imminent?
Given that RBI is tightening, and the rupee is appreciating, it is going to lower earnings of IT and BPO exporters, which comprise a large portion of the Sensex. If earnings are lowered, FIIS will dump and pull out money.

Eventually, the IT / BPO companies will force the govt to depreciate the rupee...which means lowered interest rate and increased money supply. That is going to be devastating..because Inflation will once again, get out of control.

So have your pick: inflation or recession.

[Indorie]

Usually RBI intervenes when Rupee appreciates beyond certain limit but right now I guess they are busy with the plans of checking inflation. But it looks like temporary phase.

[echarcha]

Problem is that all this growth is centered in big cities and the types of jobs require highly skilled workforce. Unless manufacturing and less skill labour intensive jobs are made available, there will be no percolation of wealth to all the levels of society. Unless there is prosperity outside big cities, our economy will not really be 'growing and healthy'.

I am no economist, but out here, smaller towns also have enough jobs which lets local people make a living and afford things.

Anyway.. since this is echarcha and we can have brain farts, there, I have posted my brain farts

[sgars]

My View is not there in any of the options. it would probably keep appreciating, but would not hit 35/USD so soon. it might stabilise at 40 or current levels. BTW, it is not the rupee alone which is appreciating it is USD also which has depreciated a bit. After a long time 1 GBP is more than 2 USD (partially due to Pound appreciating) and 1.5 SGD is 1 USD (used to be 1.7 - 1.8)

[HarHarMahaDev]

Read the story if u got time...

Sub: A real estate bust in India is imminent..

http://economictimes.indiatimes.com/...ow/1954062.cms