Depreciation of Indian Rupee

Depreciating Indian Rupee : Problems in Indian Economy

AGENDA
TEAM PROBLEM INTRODUCTION DESCRIPTION INR VALUE DETERMINATION AFFECTS ON INDIAN BUSINESS
BALANCE OF TRADE ISSUE OIL IMPORTS GOLD IMPORTS

LACK OF CAPITAL INFLOWS ROLE OF RBI AND GOVERNMENT

TEAM

Team
• Ankit Ahuja [e-mail]

• Ankit Kawad
• Angshuman • Akumtoshi

[e-mail] [e-mail] [e-mail]

PROBLEM INTRODUCTION
DESCRIPTION, INR VALUE DETERMINAT ION AND EFFECTS ON BUSINESS

The Weakening Rupee
•2nd worst performer in currency market among developing countries. Lost 9.25% since May 2013 •Indonesia(RUPAIYA)and South Africa(RAND) depreciated by 7% and 10 % resp. They compete with India in Agri-products, Engg. goods, electronics and chemicals

• Similarly Bangladesh(TACCA) depreciated by 5%, which competes in garment industry.
•Thailand(BAHT) that competes in gems and jewellery, there currency have depreciated by 7% .

INR value determination

Affects of Weakening Rupee on Businesses
Positives

• • • • • •

Mixed

Negative

Companies having foreign debt will be impacted severely as compared to export oriented companies

BALANCE OF TRADE PROBLEM
O IL IMPORTS ISSUE

Balance of Trade – Imports vs Exports

Oil Imports

BALANCE OF TRADE PROBLEM
GO LD IMPORTS AND LACK O F CAPITAL INFLOWS

Gold Imports

•950 Tons of estimated imports this year
•Villainous figure in CAB

• 10% of Import bill , 75% of Imports as Jewelry
•33% of World’s demand

•Need for innovative financial instruments that can provide real returns

Lack of Capital Inflows

•$3.3 billion of Government & Corporate Bonds Bought vs$6.86b last year

REGULATOR & ADMINISTRATOR
RO LE OF RBI AND GOVERNM ENT

Role of RBI
Authorized Body, Forex Licenses Investments by Foreigners & Foreign Travel EXIM Trade
RBI is the apex bank that intervenes, supervises, controls the foreign