1. 10/8/2012 JAVAID DAR 1

2. Presented By
Javaid Dar
dar javaid482@gmail.com
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3. INTRODUCTION
Exchange rate: the rate at which domestic currency is
exchanged with the foreign currency.
Depreciation: a decline in the rate of exchange of one
country's currency in terms of the other's due to market forces.
Indian currency (INR) has depreciated close to
22% in the last 1 year.
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4. ecointersect.com
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5. Does India need depreciating rupee?
 YES or NO!
India is a net importer
Imports oil, gold etc.
Large external debt ( 16385 billion).
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6. Continued Global uncertainty.
Current account deficit.
Capital account flows.
Persistent inflation.
.
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7. Interest rate difference
Lack of reforms
Black money and Corruption
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8. Rupee cost of
imports have increased by Rs.
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65999 crore.
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9. IMPACT ON OIL IMPORTS
http://rtn.asia/1218_indias-crude-oil-bill-rose-40
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11. INCREASED BURDEN ON
BORROWERS
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12. IMPACT ON EXTERNAL DEBT Source: SEBI
DEBT(Rs billion)
 June-2011 Nov-2011 Change
Government Debt 3525.7 4068.7 543.0
Non-Government Debt 10672.5 12316.2 1643.8
Total External Debt 14198.2 16384.9 2186.8
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13. IS DEPRECIATION BAD FOR ALL?
 Yes or No
 Effect on exporters.
 Effect on NRI,s
 Effect on those investing in foreign.
 Effect on IT companies.
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14. IS INDIA THE ONLY LOOSER? Source:www.x-rates.com
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15. What can the RBI do?
Raise policy rates
Use FOREX reserves
Ease capital controls
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16. POLICY RECOMENDATIONS
Oil imports can be staggered.
Encourage and increase the flow of foreign investments
into India.
Invite long term FDI in infrastructure sector.
Government can consider temporary import
compression.
Gold imports should be restricted.
Export promotion.
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