RUPEE And IMPORT & EXPORTRUPEE And IMPORT & EXPORT

PRESENTED BY- KAMAL SONIPRESENTED BY- KAMAL SONI

INMANTEC, GhaziabadINMANTEC, Ghaziabad

ContentContent

Appreciation & DepreciationAppreciation & Depreciation

• Appreciation means when the value of rupee against $ move up.

• $ got weaker when rupee got strong

• Depreciation means when the value of rupee against $ goes down.

• In that case $ got stronger than rupee

Reasons of FluctuationReasons of Fluctuation

Effect on ExportEffect on Export

• Increasing the value of rupee has destructive impact on exporter

• And decreasing value have positive impact on them.

• Supposing a BPO company charged $100 for its services, it would be getting payed an equavalent amount to Rs 4800 as per old exchange rates

• But because of the appreciating rupee, it now gets payed Rs 4000, and as the market gets increasingly competative the company cannot increase the fee it charges the client to $120 to cover this loss, as it risks losing the client to some other company.

• According to the FICCI study, the most significant impact of the appreciating rupee is the pressure on margins, with 86 per cent of the exporter-respondents complaining about it.

• This is the crux of the matter behind the protest among some sections of exporters against the appreciation.

Effect on Different SectorsEffect on Different Sectors

• IT & BPO sector• CHEMICAL PRODUCTS• DOMESTIC MANUFACTURING

INDUSTRY• Textile and Cotton industries

When Value Appreciated!!!...When Value Appreciated!!!...

• Around 30% of the share of exports to be affected

• More than 86% of exports in USD• In Textile and cotton industries,

Exporters considering to layoff 275000 workers by year end

• Erosion of competitiveness• Business shift to countries with

lower value of exchange rate

Effect on ImportEffect on Import

• Value of rupee has impact on import as on export but vice-versa to the export.

• In import when the rupee appreciated, then it has positive impact on importer and when it depreciated, then it is harmful for the importer.

For example

• A importer of gold pay 4800 Rs for importing gold when Rs. was at 48 per $. But now when Rs is at 39Rs per $ then he has to pay only 3900. so importer always look for appreciate Rs against $.

Effect on Different SectorsEffect on Different Sectors

• Crude Oil• Pharmaceutical products• ores and metals• Imported components such as

Personal Computers and laptops• For the borrower• For the investor• For the country’s Balance of

Payments

Why the Rupee needs to

appreciate further?

Addressing Inflation

• Rupee appreciation needs to be allowed to control inflation

Reduced Production Cost• Reduced prices of imported raw

material like oil & steel, Hence, reduced cost of production

Government External Debt

• A 10% rise in the rupee, causes an equivalent decrease in India’s external debt.

• Reduced Foreign Debts • Foreign Acquisitions

Cheaper Imported Goods

Cheaper consumable goods•Consumer electronics•Apparels

Cheaper travel abroad •Students•Tourists

Reduced R&D expenses•Automobile•Electronic & Electrical goods

Why the Rupee needs to depreciate?

Exports and Exporters

The IT Imbroglio

Stop Job Losses

Conclusion

• In recession, when Rs. is going down, RBI trying to control and balance the exchange rate.

• India is import oriented country, so it should focus to stop more depreciation in Rs. value.

• To sustain the growth rate, Govt. should focus on welfare of importer and exporter by providing subsidies.

THANK YOUFire the

questions PLZ….