RUPEE And IMPORT & EXPORT
Presented by:Badri Narayan Singh Anup Mittal Palak Kundu Naveen Kumar Kamal Kant Soni
Content
Appreciation & Depreciation • Appreciation means when the value of rupee against $ move up. • $ got weaker when rupee got strong • Depreciation means when the value of rupee against $ goes down. • In that case $ got stronger than rupee
Reasons of Fluctuation
Effect on Export • Increasing the value of rupee has destructive impact on exporter • And decreasing value have positive impact on them.
• Supposing a BPO company charged $100 for its services, it would be getting payed an equavalent amount to Rs 4800 as per old exchange rates
• But because of the appreciating rupee, it now gets payed Rs 4000, and as the market gets increasingly competative the company cannot increase the fee it charges the client to $120 to cover this loss, as it risks losing the client to some other company.
• According to the FICCI study, the most significant impact of the appreciating rupee is the pressure on margins, with 86 per cent of the exporter-respondents complaining about it. • This is the crux of the matter behind the protest among some sections of exporters against the appreciation.
Effect on Different Sectors • IT & BPO sector • CHEMICAL PRODUCTS • DOMESTIC MANUFACTURING INDUSTRY • Textile and Cotton industries
When Value Appreciated!!!... • Around 30% of the share of exports to be affected • More than 86% of exports in USD • In Textile and cotton industries, Exporters considering to layoff 275000 workers by year end • Erosion of competitiveness • Business shift to countries with lower value of exchange rate
Effect on Import • Value of rupee has impact on import as on export but vice-versa to the export. • In import when the rupee appreciated, then it has positive impact on importer and when it depreciated, then it is harmful for the importer.
For example • A importer of gold pay 4800 Rs for importing gold when Rs. was at 48 per $. But now when Rs is at 39Rs per $ then he has to pay only 3900. so importer always look for appreciate Rs against $.
Effect on Different Sectors • • • •
Crude Oil Pharmaceutical products ores and metals Imported components such as Personal Computers and laptops • For the borrower • For the investor • For the country’s Balance of Payments
Why the Rupee needs to appreciate further?
Addressing Inflation • Rupee appreciation needs to be allowed to control inflation
Reduced Production Cost • Reduced prices of imported raw material like oil & steel, Hence, reduced cost of production
Government External Debt • A 10% rise in the rupee, causes an equivalent decrease in India’s external debt.
• Reduced Foreign Debts • Foreign Acquisitions
Cheaper Imported Goods Cheaper consumable goods •Consumer electronics •Apparels Cheaper travel abroad •Students •Tourists Reduced R&D expenses •Automobile •Electronic & Electrical goods
Why the Rupee needs to depreciate?
Exports and Exporters
The IT Imbroglio
Stop Job Losses
Conclusion • In recession, when Rs. is going down, RBI trying to control and balance the exchange rate. • India is import oriented country, so it should focus to stop more depreciation in Rs. value. • To sustain the growth rate, Govt. should focus on welfare of importer and exporter by providing subsidies.
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