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Rupee depreciation 2012

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Rupee depreciation 2012

  1. 1. 10/8/2012 JAVAID DAR 1
  2. 2. Presented By Javaid Dar dar javaid482@gmail.com 10/8/2012 JAVAID DAR 2
  3. 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. 10/8/2012 JAVAID DAR 3
  4. 4. ecointersect.com 10/8/2012 JAVAID DAR 4
  5. 5. Does India need depreciating rupee?  YES or NO! India is a net importer Imports oil, gold etc. Large external debt ( 16385 billion). 10/8/2012 JAVAID DAR 5
  6. 6. Continued Global uncertainty. Current account deficit. Capital account flows. Persistent inflation. . 10/8/2012 JAVAID DAR 6
  7. 7. Interest rate difference Lack of reforms Black money and Corruption 10/8/2012 JAVAID DAR 7
  8. 8. Rupee cost of imports have increased by Rs. 10/8/2012 65999 crore. JAVAID DAR 8
  9. 9. IMPACT ON OIL IMPORTS http://rtn.asia/1218_indias-crude-oil-bill-rose-40 10/8/2012 JAVAID DAR 9
  10. 10. 10/8/2012 JAVAID DAR 10
  11. 11. INCREASED BURDEN ON BORROWERS 10/8/2012 JAVAID DAR 11
  12. 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 10/8/2012 JAVAID DAR 12
  13. 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. 10/8/2012 JAVAID DAR 13
  14. 14. IS INDIA THE ONLY LOOSER? Source:www.x-rates.com 10/8/2012 JAVAID DAR 14
  15. 15. What can the RBI do? Raise policy rates Use FOREX reserves Ease capital controls 10/8/2012 JAVAID DAR 15
  16. 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. 10/8/2012 JAVAID DAR 16
  17. 17. 10/8/2012 JAVAID DAR 17

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