More Info
									                           INDIAN RUPEE DEPRECIATION

One wonders if India is still the right place to invest. With the rupee
depreciating and with rate of growth down to 5%, will Indian economy sustain?
Indian economy has been always growing at 5% and above. Moreover, India has
good forex reserves including gold and so the economy is not fragile. With the
depreciating rupee, Non Resident Indians can expect an attractive deposit schemes
such as the "resurgent deposits" a few years back when India need foreign
exchange. So let us see what the finance ministry comes out to attract Non-
Resident Indians (NRI) deposits. At present NRI deposits attract 9.50% for 59
months. This has brought in good amount of foreign exchange to India. NRI
deposits in the country can be raised by at least $10-15 billion in the short term by
taking confidence-building measures and offering attractive interest rates. The
Reserve Bank of India increased the number of remittances by non-resident Indians
to individuals to 30 from 12 per year, it said in a news release on Friday. The
measure is another step to help boost dollar inflows and protect a weakening rupee.
The depreciating rupee is good news for exporters. The increase exports will bring
in more foreign exchange to India which will help stabilise rupee. Increase Exports
should be the mantra. Reduce imports.
India has two major import elements –Oil – petroleum and Gold. Import of gold can
be regulated and so that can reduce the import cost. Fewer imports and more
exports will appreciate rupee which will become more competitive in the
international market.

Effect of depreciating rupee in India
      Foreign currency will become cheaper so more remittance from non resident
       Indians. Advantage to Indian Diasporas.
      Indians wanting to visit abroad will have to pay more and hence foreign tour,
       visit abroad, tourism will reduce or postpone.
      Attraction to foreigners to visit India as tourists which again will bring in
       foreign currency.
      Parents of Indian students have to pay more rupees to pay for fees for their
       children studying abroad.
Indian rupee will not depreciate further if the flow of foreign exchange increases.
The corrective measures are taken at the right time and investors confident are
boosted up. Needless to say, much depends on the economy of USA and major
countries in Europe. We presume the major currency remains stable.


To top