‘Save’ Rupee !
The value of the Indian national currency, the Rupee, is shockingly weakening sending nightmares across the sub continent. The current trend of the depreciation of money value is very unhealthy. Around the summer the value of money against American dollar was only a little over Rs.53. In less than a couple of months the down slide has dragged down the money value to all-time-low of Rs.61.21 against dollar this Monday. The RBI Governor Dr.Subbarao might not have imagined his final months in office like this.
How does the money value slide? Though I’m no economist, a bit of reading has given an understanding on the matter, which I feel is more than enough for a lay man like me. Exchange rate and Money value like any other commodity is based on the laws of demand and supply. The money value is so volatile that during any given day, its value changes every minute during the trading secessions. Banks, Corporations, Government, individuals all buy and sell currencies during a trade day and this sets the money value in fluctuation. The value of money is said to be strong when its need get elevated. The more the requirement, the more its value shoots up.
The Central bank of the nation, the RBI controls the fund flow, and keeps a check always to boost its value whenever it slackens. RBI sells dollars in the market to level up the rupee from weakening further. Central banks world over act together with this regard selling and buying currencies. RBI also injects money to other national banks to keep up the liquidity of the cash, if necessary.
The current scenario of the dwindling money affects the normalcy in many ways. The oil imports take the first and worst hit, as dollar is the international currency used in this trade. A weakened money value would pep up the cost of buying oil considerably. The change in the cost of oil hits every sector of the society, shortly after, not sparing any. Since the hike in fuel prices are tightly knitted to the price rise, the already worse situation will worsen further. A historical look into the value of Rupee Vs Dollar is as seen below ( Source : http://en.wikipedia.org/wiki/History_of_the_rupee)
|2010 (January 22)||46.21|
|2011 (September 21)||48.24|
|2011 (November 17)||55.3950|
|2012 (May 23)||56.25|
|2012 (June 22)||57.15|
|2013 (May 15)||54.73|
|2013 (June 12)||58.500|
|2013 (June 27)||60.73|
|2013 (July 08)||61.14 (All-time low)|
Something has to be done immediately to hold this trend and revive the value of money. The depreciating money value has triggered a pessimistic idea among the Indian students who pursue their higher studies abroad and many have already shelved their idea of returning back to India and the rest are pondering over the same. Most of them have gone there availing loans in foreign banks, in dollars. If the current trend prevails for a while repaying the loan from India in rupee would not be a good idea. This tendency stops them and it is understandable.
The only sector that would stick a smile on its face during these turbulent times is the IT industry. For they will receive more pay for an outsourced project. Since they are paid in dollars their pay increases, when converted into rupee. So naturally the interest in buying IT stocks has shoot up in the share trade in the past few days.