Read this.
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Rising rupee pushes down inflation
GAYATRI NAYAK
TIMES NEWS NETWORK[ THURSDAY, MARCH 29, 2007 02:50:28 AM]
MUMBAI: A STRONG rupee might hurt exporters, but there are many advantages for the economy. By letting the rupee appreciate, RBI is indirectly controlling inflation by simultaneously managing liquidity and addressing overheating of the economy to a certain extent.
The value of the rupee touched a seven-year high at the close of Wednesday trading to 43.05 per dollar. In the last one week, the rupee has recorded one of the fastest gains against the US dollar. This, according to treasury officials, is largely because the central bank has refrained from purchasing dollar inflows. Thus, in the process, it also curtailed liquidity growth that helps curb demand-side inflation.
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Rupee appreciation to hit software cos
MINI JOSEPH TEJASWI
TIMES NEWS NETWORK[ THURSDAY, MARCH 29, 2007 12:30:55 AM]
BANGALORE: With the rupee appreciating over the last couple of days and touching a seven-year high against the dollar on Wednesday, the brows in software companies are getting deeper.
A strong rupee is expected to affect the fourth quarter results of these companies adversely. Analysts expect software firms to report 1-2% lower operating margins on account of strong rupee.
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Dollar buying by banks see Re drop to 43.43/$
Press Trust of India / Mumbai March 29, 2007
Business Standard.
Arresting the three-day strong rally, the rupee today slipped to 43.40/43 per dollar in late morning trades on fairly good buying by banks - suspected to be on behalf of the central bank.
The rupee had climbed to its highest level in more than eight years yesterday following a strong 69 paise surge in the last three sessions due to heavy dollar sales by banks that are facing acute liquidity crunch.
The Reserve Bank of India, which was suspected to have intervened after the rupee neared the 43 per dollar level yesterday, seemed to be active to check the rupee's sharp rise against the dollar, a forex dealer said.
Oil companies, too, were believed to be making month-end dollar purchases as the global crude oil soared to around $64 per barrel.
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.....and now.
The positive side of the appreciating rupee is clearly evident by the many news reports. The rate of inflation is falling. The cost of oil imports are bound to come down in spite of the fact the cost of oil is touching USD 64 per barrel. We will be spending less now than when the oil was at USD 58 per barrel., because of the appreciation. The Fundamental characteristics of Indian export and imports is our imports are largely physical like Oil, Gold, Diamonds and other goods. Our exports are both physical and service exports. Service exports have outgrown the physical exports and continues to grow. The costs of physical exports are also import based. Service exports are largely human resource based than can always be controlled. Export billing should shift to Euro where ever possible. Therefore an appreciating rupee will always be good for India for both the short and long term. RBI intervention now will be like killing the golden goose.
We will also see heavy remittance from NRIs, PIOs and those Indians who have parked funds in USD. This will accelerate the appreciation of the rupee. If the margins of software companies are "under pressure" either bargain for better prices or give a "decrement" ( I do not know whether such a word exits) to the employees. The Housing and real estate market in the upper segment will cool down. The car sales in the 5 lakhs plus category would decline. Some sense in the labour market would prevail after a long time. Indians and Indian companies investing or buying business overseas will be benefited. Foreign travel will become cheaper. This is especially good for business travellers looking to expand their business.
Indian Rupee will be accepted in more countries world wide than it is today. We will also see many countries building Indian Rupee reserves.
Personal Savings - the back bone of the Indian banking system will continue to grow. We could see a reversal of trend of personal borrowings in the form of credit cards, personal loans, car loans etc to that of savings and investments. Indian Govt was borrowing from World Bank, IMF, ADB etc because of the need for forex and not because there was dearth of savings. This borrowing can be eliminated and stopped. Govt can tap domestic savings by issuing bonds in the market.
Dhakshina Moorthy, K.M.
******
Rising rupee pushes down inflation
GAYATRI NAYAK
TIMES NEWS NETWORK[ THURSDAY, MARCH 29, 2007 02:50:28 AM]
MUMBAI: A STRONG rupee might hurt exporters, but there are many advantages for the economy. By letting the rupee appreciate, RBI is indirectly controlling inflation by simultaneously managing liquidity and addressing overheating of the economy to a certain extent.
The value of the rupee touched a seven-year high at the close of Wednesday trading to 43.05 per dollar. In the last one week, the rupee has recorded one of the fastest gains against the US dollar. This, according to treasury officials, is largely because the central bank has refrained from purchasing dollar inflows. Thus, in the process, it also curtailed liquidity growth that helps curb demand-side inflation.
******
Rupee appreciation to hit software cos
MINI JOSEPH TEJASWI
TIMES NEWS NETWORK[ THURSDAY, MARCH 29, 2007 12:30:55 AM]
BANGALORE: With the rupee appreciating over the last couple of days and touching a seven-year high against the dollar on Wednesday, the brows in software companies are getting deeper.
A strong rupee is expected to affect the fourth quarter results of these companies adversely. Analysts expect software firms to report 1-2% lower operating margins on account of strong rupee.
******
Dollar buying by banks see Re drop to 43.43/$
Press Trust of India / Mumbai March 29, 2007
Business Standard.
Arresting the three-day strong rally, the rupee today slipped to 43.40/43 per dollar in late morning trades on fairly good buying by banks - suspected to be on behalf of the central bank.
The rupee had climbed to its highest level in more than eight years yesterday following a strong 69 paise surge in the last three sessions due to heavy dollar sales by banks that are facing acute liquidity crunch.
The Reserve Bank of India, which was suspected to have intervened after the rupee neared the 43 per dollar level yesterday, seemed to be active to check the rupee's sharp rise against the dollar, a forex dealer said.
Oil companies, too, were believed to be making month-end dollar purchases as the global crude oil soared to around $64 per barrel.
******
.....and now.
The positive side of the appreciating rupee is clearly evident by the many news reports. The rate of inflation is falling. The cost of oil imports are bound to come down in spite of the fact the cost of oil is touching USD 64 per barrel. We will be spending less now than when the oil was at USD 58 per barrel., because of the appreciation. The Fundamental characteristics of Indian export and imports is our imports are largely physical like Oil, Gold, Diamonds and other goods. Our exports are both physical and service exports. Service exports have outgrown the physical exports and continues to grow. The costs of physical exports are also import based. Service exports are largely human resource based than can always be controlled. Export billing should shift to Euro where ever possible. Therefore an appreciating rupee will always be good for India for both the short and long term. RBI intervention now will be like killing the golden goose.
We will also see heavy remittance from NRIs, PIOs and those Indians who have parked funds in USD. This will accelerate the appreciation of the rupee. If the margins of software companies are "under pressure" either bargain for better prices or give a "decrement" ( I do not know whether such a word exits) to the employees. The Housing and real estate market in the upper segment will cool down. The car sales in the 5 lakhs plus category would decline. Some sense in the labour market would prevail after a long time. Indians and Indian companies investing or buying business overseas will be benefited. Foreign travel will become cheaper. This is especially good for business travellers looking to expand their business.
Indian Rupee will be accepted in more countries world wide than it is today. We will also see many countries building Indian Rupee reserves.
Personal Savings - the back bone of the Indian banking system will continue to grow. We could see a reversal of trend of personal borrowings in the form of credit cards, personal loans, car loans etc to that of savings and investments. Indian Govt was borrowing from World Bank, IMF, ADB etc because of the need for forex and not because there was dearth of savings. This borrowing can be eliminated and stopped. Govt can tap domestic savings by issuing bonds in the market.
Dhakshina Moorthy, K.M.
1 comment:
I have different opinion about the appreciating Indian rupee; I suspect foul play by RBI because of the timing it chose to stop intervening. It could be to help TATA’s move out $12+ billion of Forex out of the country for the CORUS deal.
For further details of my view please visit by blog
http://corusdeal.blogspot.com
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