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USDINR Empty USDINR

Post by rawemotions Thu May 22, 2014 8:48 pm

Where do you see USD to INR ratio headed over a 1-2 year time frame?

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Post by TruthSeeker Thu Jul 10, 2014 12:45 am

1 USD = Rs 58-62.

i.e. not much fluctuation. Boring, yeah.

But why will it change?

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Post by rawemotions Sat Jul 12, 2014 3:26 pm

TruthSeeker wrote:1 USD = Rs 58-62.

i.e. not much fluctuation. Boring, yeah.

But why will it change?
India continues to have a need to reduce long term inflation. Having a reduced price for Petroleum product, is the fastest way to reduce this number.  Moreover there are many trends world over that can cause a change in price of USDINR.

India wants to reduce import price of petroleum, but the challenge here is that , it has to do it without hurting exports. Even if supply side constraints are erased, the import price of petroleum will continue to be a stumbling block and for reducing inflation, also a long term threat, given the geo-political gyrations. The reason, GOI is not able to right away work on this is because
a) Government levies additional taxes which fetches it revenue
b) Reducing it suddenly will cause a shock to the export sector.

So there is a need to ensure a calibrated approach, where export sector can adjust itself to the trend, and then begin steps to reverse the trend of high USDINR.  So I would imagine the GOI setting in a motion steps to change the trend towards depreciating USDINR. But it needs some internal policy fixes before it can focus on the exchange rate issue. This is all the more critical, now that black money does not have a chance make an appearance anytime soon.


This argument excludes external factors that can cause USDINR change, reduction in the value of dollar due to lower demand and financial risks in China for example causing increased dollar deman. Lower dollar demand is more probably, because more countries are moving to non-dollar denominated oil trade, and oil trade is the single biggest reason for the dollar's reserve currency status.Also there is a move to replace dollar as the sole reserve currency, with a basket of reserve currencies like Dollar, Euro and Yen, with China pushing for Yuan also to be included.

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Post by TruthSeeker Thu Jul 24, 2014 11:35 pm

Hi RE,

Currency trade? Like I said Rs 58-62: IMHO, going to stay that way for a long time.

Boring.

Why get into the nitty-gritty details of it?

I am invested in INXX, INDL instead, if Indian story is to materialize.

After coming out of India, for so long, I do feel that India considers herself over-rated.

Too much potential, Too many laws, BUT Too less result on ground - IMO.

But as an Indian, I'd bet on the potential.

Hopeful,
TS.

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Post by truthbetold Fri Jul 25, 2014 9:10 pm

rawemotions wrote:
TruthSeeker wrote:1 USD = Rs 58-62.

i.e. not much fluctuation. Boring, yeah.

But why will it change?
India continues to have a need to reduce long term inflation. Having a reduced price for Petroleum product, is the fastest way to reduce this number.  Moreover there are many trends world over that can cause a change in price of USDINR.

India wants to reduce import price of petroleum, but the challenge here is that , it has to do it without hurting exports. Even if supply side constraints are erased, the import price of petroleum will continue to be a stumbling block and for reducing inflation, also a long term threat, given the geo-political gyrations. The reason, GOI is not able to right away work on this is because
a) Government levies additional taxes which fetches it revenue
b) Reducing it suddenly will cause a shock to the export sector.

So there is a need to ensure a calibrated approach, where export sector can adjust itself to the trend, and then begin steps to reverse the trend of high USDINR.  So I would imagine the GOI setting in a motion steps to change the trend towards depreciating USDINR. But it needs some internal policy fixes before it can focus on the exchange rate issue. This is all the more critical, now that black money does not have a chance make an appearance anytime soon.


This argument excludes external factors that can cause USDINR change, reduction in the value of dollar due to lower demand and financial risks in China for example causing increased dollar deman. Lower dollar demand is more probably, because more countries are moving to non-dollar denominated oil trade, and oil trade is the single biggest reason for the dollar's reserve currency status.Also there is a move to replace dollar as the sole reserve currency, with a basket of reserve currencies like Dollar, Euro and Yen, with China pushing for Yuan also to be included.
In the short term indian govt would like to keep rupee stable. But in the long  rupee is dependent on Indian economy.  If Indian economy makes real progress, rupee will start appreciating against dollar. but this is too early to talk about.

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