Iranians are good people under pressure.
Meaning, India needs to get deals finalized with Iran when they are under pressure.
News Indian rupee at fresh record low, breaches 71 for the first time
- Thread starter Himanshu
- Start date
Meaning, India needs to get deals finalized with Iran when they are under pressure.
Rupee will settle around 75 level and rise to 72 by end of Feb 2019 and will maintain that level for couple of years. US is shooting itself in the foot. What if India-Russia-China-Iran get into a quad relationship to use eachothers currency for payments? Like Iran uses Indian rupee not only to buy from India but from Russia as well and so does Chinese yuan and rouble. We import more from China and Russia and we can use Rouble and Yuan from Iran to pay for our imports from these countries while Iran can use Rupee to buy our products. But the silver lining is that Russia and Iran will have to replace most other nations as their importers giving India an advantage.
To be honest, I think India is doing right thing to let the rupee depreciate. It will push people to buy less imported items like smartphones and help exporters to export more. Other option will hurt our Forex reserves.
As far as US goes, the current sentiment is around instant gratification and reactionary measures. No wonder because of the administration in white house.
Interesting RBI didn't raise rate today and open market operations are also at best to avoid volatility in rupee, seems like they want to test how low rupee can go and are not in a mood to arrest the fall. The steps taken by finance minister were cosmetic at best with no significant step.
While I agree with your other post, I do not agree with this one. RBI should have increased the money available for lending and reduced interest rates. You don't know the kind of distress we now have in Industry for want of money? reducing interest rates and making money available for lending would have corrected the rupee rate also. Jai-Italyji and IMF Urjit Patel need to be kicked out of India asap. They will kill this nation.
Greater money supply will have very negative effect on Rupee. If they decrease interest rates the Rupee will free fall.
Depreciating Rs will flare up oil prices and more revenue loss as govt will be under the pressure to cut the rates again. 1Rs decreasing oil tax wipe off around $900 million in taxes you can calculate rest.
Increasing money supply will inflame the inflation combined with oil on steroids with weak Rs and geopolitical issues that will be death sentence to govt politically.
If you think industry will benefit, no, higher inflation suppress demand and industry won't grow either even with cheaper rates as people cut back on demand.
Decreasing interest rates benefits industry when your currency is not feeling heat, oil is not high and most importantly there is no maniac in white house. He alone is triggering so many factors that the best thing right now for developing economies is to bide time and survive if they can.
As far as mess of bad loan and stress on industry is they need to sort that out themselves, they need to man up, govt can do only so much, they need to stop corrupt practises and I think they will sort it out.
If they do that, then we will end up like Zimbabwe.
Money should be available based on inflation rates. Low inflation = Low interest. High inflation = High interest.
It's because when money supply increases in the form of loans and if inflation is not checked, then people can no longer afford stuff, and then the companies that took loans cannot pay it back, so you get defaults. And that's how you get NPAs. That's what happened between 2011 and 2013. And once you get NPAs, you will now have to start selling your assets and even your company in order to pay back debt.