Case 1 the Indian Rupee US Dollar ExchangeCurrency

8/10/2019 Case 1 the Indian Rupee US Dollar ExchangeCurrency

1/23

The Indian Rupee-US Dollar ExchangeRate: The Economic Impact of a

Strengthening Currency

In 2007, India experienced rapid appreciation of its currency against the US dollar.

The reasons for the appreciation of the rupee were a generally weak dollar in

international currency markets and sharp increase in dollar inflows into the country,

partly due to India's increasing attractiveness to foreign investors. Although India

had been seeing a steady rise in dollar inflows into the country for quite some time, on

earlier occasions, the Reserve Bank of India (RBI) had intervened in the foreign

currency market and purchased excess dollars so as to prevent any appreciation inthe value of the rupee. Now, the RBI decided not to intervene, mainly to control

inflation which was around 6 percent in early 2007.

The case discusses the reasons for the appreciation of the rupee and its possible

impact on the Indian economy. It also discusses the measures taken by the RBI and

the government to control rupee appreciation and to try offset the negative impacts of

a strong currency on the economy. The case ends with some views on the future

movement of the rupee.


2/23


3/23

249

The Indian Rupee-US Dollar Exchange

Rate: The Economic Impact of aStrengthening Currency

The profitability of exporters has been wiped out and constant appreciation isthreatening the competitiveness of our product. If we lose the market, aggressive

competitors are just sitting on the fence to occupy the market.1

- G.K. Gupta, President of the Federation of Indian Export Organizations

(FIEO),2 in October 2007

The government is concerned over the rapid appreciation of the rupee against theUS dollar and the central bank may have to intervene if there is disorderly movement

in the exchange rate.3

- P Chidambaram, Finance Minister of India, in September, 2007The objective of the exchange rate management has been to ensure that the externalvalue of the rupee is realistic and credible as evidenced by a sustainable current

account deficit and manageable foreign exchange situation. Subject to thispredominant objective, the exchange rate policy is guided by the need to reduce

excess volatility, prevent the emergence of destabilizing speculation activities, help

maintain adequate level of reserves, and develop an orderly foreign exchangemarket.

4

- RBIs Policy in the Foreign Exchange Market

Introduction

In April 2007, on the back of a rising rupee, the Indian economy became a trillion

dollar5

-economy, moving the country into an elite group of nations ( Refer Exhibit Ifor the List of Trillion Dollar Economies). By August 31, 2007, the Indian currencywas trading at 40.96 against the dollar, as compared to 46.55 on August 31, 2006, anappreciation of around 12 percent (Refer Exhibit II for Rupee-Dollar ExchangeRate Movement from August 2006 to August 2007).

The rise in the value of the rupee was a result of the general weakening of the dollar ininternational markets, plus Indias growing attractiveness to foreign investors. In2006-07, India attracted huge capital inflows in terms of foreign direct investment(FDI),6 and foreign institutional investment (FII).7 External commercial borrowings

1 Exporters Seek Government Intervention on Rupee Rise, www.newspstindia.com,

October 1, 2007.2 The Federation of Indian Export Organizations (FIEO) is a non-profit organization set up bythe Ministry of Commerce, Government of India in 1965, to coordinate and focus the effortsof organizations engaged in export promotion in the country. (Source: http://fieo.org)

3 Rapid Rupee Appreciation is a Matter of Serious Concern: FM, www.newindpress.com,September 27, 2007.

4 T.C.A. Ramanujam, Currency Crossfires, www.thehindubusinessline.com, June 27, 2003.5 Dollar ($) denotes US dollars in this case study.6 An investment made to acquire lasting interest in enterprises operating outside the economy

of the investor is called foreign direct investment (FDI). (Source: http://en.wikipedia.org)7 Foreign institutional investment is a part of foreign portfolio investment which involves

holding securities such as stocks, bonds, or other financial assets by foreign investors. InIndia, foreign institutional investors have to register with the Securities and Exchange Board


4/23

International Business

250

(ECB)8and non-resident Indian (NRI) deposits and remittances also contributed to the

dollar inflow.

Exhibit ITrillion Dollar Economies as of 2006

S. No. Country GDP*

(in million USD)

1 United States 13,201,819

2 Japan 4,340,133

3 Germany 2,906,681

4 China 2,668,071

5 United Kingdom 2,345,015

6 France 2,230,721

7 Italy 1,844,7498 Canada 1,251,463

9 Spain 1,223,988

10 Brazil 1,067,962

*GDP based on exchange rate in 2006.

India, together with Russia, became a trillion-dollar economy in early2007

Source: World Bank, 2006

Although India had been witnessing strong dollar inflows for some time, the rupee had not

appreciated as steeply as it did between September 2006 and July 2007 mainly because on

earlier occasions, strong dollar inflows into India usually saw the Reserve Bank of India(RBI)

9, Indias central bank, intervene in the foreign exchange market and purchase excess

dollars so as to minimize volatility in the value of the rupee. This time around, the RBI

chose not to intervene, in order to keep domestic inflation, which had been hovering

around 6 percent in early 2007, in check.

While the RBI and the finance ministry were able to tame the inflation rate (inflation

fell to 3.52% in August, 2007), the rupees appreciation affected Indian exporters as

Indian goods became more expensive for foreign buyers. Information technology (IT)

and textiles industries were particularly hard-hit, as they were the most dependent on

the US. Leather, sugar, and plantation crops were some of the other sectors that were

starting to lose competitiveness. The Indian Micro, Small and Medium Enterprises

(MSMEs) were also affected. It was feared that falling export competitiveness would

cause substantial job losses.

of India (SEBI) to participate in the market. There are limits on the ownership by foreigninstitutional investors in Indian companies.

8 ECBs include bank loans, suppliers and buyers credits, fixed and floating rate bonds(without convertibility) and borrowings from private sector windows of multilateralfinancial institutions such as International Finance Corporation. (Source:www.banknetindia.com)

9 The RBI was established on April 1, 1935. Initially a shareholders bank, the RBIsfunctions included regulating the issue of currency notes, maintaining reserves to ensuremonetary stability, and operating the credit and currency system of the country.


5/23

The Indian Rupee-US Dollar Exchange Rate:

251

Exhibit II

Indian Rupee-US Dollar Foreign Exchange Rate:

August 2006-August 2007Exchange rate

(As on last day of the month)

2006 August 46.55

September 45.96

October 45.02

November 44.76

December 44.23

2007 January 44.17

February 44.31

March 43.59April 41.29

May 40.73

June 40.75

July 40.44

August 40.96

Source: www.rbi.org.in.

On the other hand, the rupees appreciation against the dollar was a welcome

development for Indian importers, who were happy to pay less for their imports in

terms of rupees. Sectors which were neither net exporters nor net importers were

unaffected.

Analysts were divided in their opinion on the long-term effects of the rupees

appreciation against the dollar on the Indian economy. Some believed that as exports

as a percent of GDP are low in India, the rupees appreciation against the dollar,

though sure to impact exports, would not significantly affect the economy as a whole.

They were also confident that Indian exports would gradually regain competitiveness.

However, others were not so optimistic and were in favor of the RBI intervening in

the foreign exchange market.

In July-August 2007, the government of India announced measures to counter the

negative impact of the rupees appreciation on Indias exports. The RBI also started

buying dollars from the market to absorb the oversupply of dollars, indicating that the

rupee-dollar rate had crossed the comfort zone of the central bank.

Background Note

In India, the RBI had always played an active role in the foreign exchange market.

However, since the country faced a severe balance of payments (BOP)10

crisis in the

10 The balance of payments (BOP) measures the payments that flow between any individualcountry and all other countries. It is used to summarize all international economictransactions for that country during a specific time period, usually a year. The BOP isdetermined by the countrys exports and imports of goods, services, and financial capital, aswell as financial transfers. It reflects all payments and liabilities to foreigners (debits) andall payments and obligations received from foreigners (credits).


6/23


252

early 1990s, there was a greater understanding of the importance of the rupee-dollar

exchange rate on the economy. With reserves down to only around $ 1 billion in mid-

1991, caused partly due to a fall in exports and also due to a decline in remittances

(following the Gulf war), the country was close to defaulting on its debt repayments.The Indian government then negotiated with the IMF11for SDR12of around $ 2 billion

to stave off any external debt crisis.13However, when the crisis deepened, the country

had to mortgage a part of its gold reserves with the Bank of England. In June 1991,

the rupee (Refer Exhibit III for some background information on the rupee) was

officially devalued by around 20 percent. In 1991, as part of its agreement with the

IMF, India liberalized its economy and following this, BOP stability was more or less

restored in the period, with foreign exchange reserves increasing to $ 9.2 billion by

end March 1992.

Exhibit III

The Indian Rupee: Background

The history of currency in India dates back to the 6th

Century B.C., when firstmerchant guilds and later kings and chieftains issued silver coins as a medium ofexchange to facilitate trade. The rupee derived its name from the wordrupyakam meaning silver coin in the Sanskrit language. The forerunner to themodern Indian rupee was introduced by Sher Shah Suri, a sixteenth century ruler.The rupee, a silver coin weighing about 11.34 grams, was to remain the chiefcurrency of India till the early 20

thcentury. One rupee was divided into 16 annas

and each anna was in turn divided into 4 paisa.

In the 1770s, private and semi-government banks issued the first currency notes inIndia. Till 1835, the value of rupee varied from one state to another. With the

passage of Coinage Act in 1835, the value of the rupee became more uniformacross the country. Beginning in 1835, the East India Company started issuing a

series of coins. After 1857, the British crown took over the issue of currency.In the 19

thcentury, with the discovery of large silver mines in the US and parts of

Europe, the value of silver declined radically in comparison to gold. The rupee, as itwas defined in terms of silver, saw its value, vis--vis currencies that were peggedto gold, decline. In 1898, the rupee was pegged to the British pound, with 15 rupeesmaking one pound. In 1920, the value of the rupee was increased, with 10 rupeesnow equaling one pound. Again in 1927, the rupee value was brought down to 13.5for one pound, which was to remain the exchange rate of the rupee till 1966.

After India achieved independence on August 15, 1947, the rupee was adopted asthe sole currency of the country. In January 1949, the Reserve Bank of India wasnationalized. That year, the rupee was devalued by 30.5 percent following thedevaluation of other currencies pegged to the pound. In 1957, the rupee shifted tothe decimal system, with one rupee now equaling 100 paisa.

14

11 The International Monetary Fund (IMF) is an international organization that oversees theglobal financial system by observing exchange rates and balance of payments, as well asoffering financial and technical assistance when requested.

12 The SDR or the Special Drawing Right is an international reserve asset created by the IMFin 1969 to supplement the existing official reserves of member countries. Value of SDRs isbased on a basket of key international currencies. SDRs are allocated to member countriesin proportion to their IMF quotas. (Source: www.imf.org)

13 India joined the IMF on December 27, 1945 as one of IMFs original members.14 The Indian rupee follows the Indian numbering system. The ancient system groups numbers

by two decimal places rather then three decimal places as is done in the western system. Forexample, three hundred thousand (300,000) would be three lakhs (3,00,000), thirty million


7/23


253

In June 1966, the rupee was devalued by 57.5 percent and its exchange rate againstthe dollar was set at 7.50, compared to 4.76 prior to the devaluation. In August1971, with the Bretton Woods System (The Bretton Woods system involved

member countries agreeing to an exchange rate system where each currency tradedwithin defined parities with the US dollar) breaking down, the rupee was pegged tothe dollar, with the rupee-dollar exchange rate continuing at 7.50. However, afterthe dollar devalued on December 18, 1971, the rupee was again pegged to the

pound on December 20, 1971, with Rs 18.967 equal to one pound. When the poundwas floated on June 23, 1972, the rupee depreciated again. In 1975, the rupee waslinked to a basket of currencies of Indias major trading partners the dollar, the

pound, the yen, the Deutsche mark, and the Italian lira. To express the value of therupee, the pound was used by the RBI as reference currency. The RBI declared theofficial rate of the rupee against the pound on a daily basis.

In 1978, the Indian rupee was given the official ISO 4217 abbreviation of INR INfor India and R for Rupee.

In March, 1992, the government of India announced full convertibility of the rupee

in the current account. As of 2007, the government was considering fullconvertibility of the rupee in the capital account as well.

Compiled from various sources

In March, 1992, the Liberalized Exchange Rate Management System (LERMS) was

introduced under which a dual exchange rate15 was adopted. In March 1993, theLERMS was replaced by the unified exchange rate system and the system for setting

exchange rates changed from a controlled system to a managed float system.16

In

1993-94, the rupee was made freely convertible for trading, but not for investment

purposes.

After liberalization, Indias exchange rate policy focused on managing the fluctuationof the rupee-dollar exchange rate and at the same time allowing the demand and

supply conditions to determine the exchange rate. Post-1991, the RBI intervened inthe foreign exchange market whenever it deemed necessary and took suitable

measures to counter speculative pressures on the rupee and maintain stability in the

foreign exchange market, also with an eye to maintaining Indias external

competitiveness. It purchased or sold dollars in order to reduce the excess supply of orexcess demand for dollars.

From 1991 to 2002, the rupee depreciated steadily against the dollar, from Rs 17.94 to

Rs 48.15. This happened despite foreign exchange inflows that increased the foreign

exchange reserves of the country from $ 5.8 billion to $ 51.05 billion during the

period. The reserves grew in large part due to a healthy increase in exports (from $18.48 billion to $ 44.91 billion

17). Growth in private transfers, especially remittances

from migrant workers, increased manifold from $ 2.08 billion to $ 12.19 billion.

(30,000,000) would be three crores (3,00,00,000), and three billion (3,000,000,000) wouldbe three arabs (3,00,00,00,000).

15 In a dual exchange rate system, both fixed and floating exchange rates are applied in themarket. The fixed rate is applied only to certain segments of the market such as imports andexports, and/or current account transactions, and a market-driven (floating) exchange rate isapplied to capital account transactions. (Source: www.investopedia.com)

16 Managed float regime is the current international financial environment in which exchangerates fluctuate from day to day, but central banks attempt to influence their countriesexchange rates by buying and selling currencies. It is also known as a dirty float. (Source:http://en.wikipedia.org)

17 Harish Damodaran, Forex Reserves: From Penury to Plenty, www.blonnet.com,November 29, 2002.


8/23


254

Export earnings from the software sector increased from practically zero in 1992-93 to

$ 7.17 billion in 2001-02. Foreign capital inflows in the form of FII and FDI also

contributed to the growth in foreign exchange reserves.

Between January 2003 and March 2004, the rupee began to steadily appreciate against

the dollar. In 2004, the period between March and November was marked by

fluctuations in the exchange rate. From December 2004 to September 2005, the

exchange rate remained at more or less the same levels. The next year was again a

period of fluctuating exchange rates. From September 2006, the rupee again began to

appreciate against the dollar (Refer Exhibit IV for rupee-dollar exchange rate from1998 to July 2006).

Exhibit IV

Indian Rupee-US Dollar Foreign Exchange Rate*: 1998-2006

1998 1999 2000 2001 2002 2003 2004 2005 2006

January 39.39 42.55 43.59 46.61 48.35 47.96 45.46 43.62 44.20

February 39.01 42.53 43.65 46.56 48.72 47.75 45.27 43.58 44.23

March 39.57 42.52 43.64 46.65 48.77 47.68 44.97 43.59 44.34

April 39.70 42.80 43.68 46.79 48.94 47.39 43.89 43.64 44.82

May 40.47 42.86 44.08 46.95 49.02 47.11 45.18 43.41 45.20

June 42.37 43.21 44.76 47.04 48.98 46.70 45.50 43.52 45.89

July 42.61 43.36 44.84 47.18 48.79 46.22 46.06 43.43 46.37

August 42.84 43.50 45.77 47.17 48.62 45.96 46.32 43.55

September 42.58 43.60 45.97 47.75 48.46 45.85 46.05 43.85

October 42.39 43.55 46.43 48.05 48.39 45.40 45.74 44.76

November 42.43 43.46 46.82 48.04 48.29 45.55 45.03 45.63

December 42.59 43.52 46.78 47.93 48.15 45.57 43.85 45.56

*As on last day of every month.

Source: www.economagic.com.

Reasons behind the Appreciation of the Rupee in 2006-07

Toward the end of 2006, foreign exchange inflows, especially of dollars, into India

started rising sharply. This put upward pressure on the rupees exchange rate againstthe dollar. Indias steady economic growth offered several opportunities for foreigncompanies. Between April 2006 and March 2007, FDI of $ 16 billion flowed in toIndia. This was around three times the preceding years figure. More than 50 percentof these inflows arrived between December 2006 and March 2007. By August 24,2007, Indias foreign exchange reserves had increased to a record $ 228.8 billion(Refer Exhibit V for Indias foreign exchange reserves between 1991 and 2006).

Indias booming stock market contributed to the foreign exchange inflows. In 2006-07, FII inflows increased by 61 percent (year-on-year) to touch $ 105.8 billion. Thenet FII inflows for the year were $ 7.99 billion. In the first five months of 2007 -08, netFII inflows crossed $ 8.4 billion. Portfolio capital inflows also came from overseas


9/23


255

equity issues of Indian companies via global depositary receipts (GDRs)18

andAmerican depositary receipts (ADRs).

19Inflows from GDRs and ADRs amounted to $

3.8 billion in 2006-07 with a year-on-year increase of 48 percent.

Exhibit V

Indias Foreign Exchange Reserves between 1990-91 and 2005-06

Source: Report on Foreign Exchange Reserves, www.rbi.org.in, July 14, 2006.

Apart from the equity issues, several Indian companies borrowed massive amounts ofmoney, mostly in dollars, from abroad to fund investments and acquisitions in India,and this also contributed to the dollar inflows. The first quarter of 2007-08 (April-June) recorded ECBs of $ 48.3 billion, an increase of 12.9 percent compared to thefirst quarter of the previous year.

20

Another major source of capital inflows was non-resident Indian (NRI) deposits inbank accounts in India. As Indian banks offered higher interest rates on deposits thanoverseas banks, NRIs preferred to invest in India. The NRI deposits stood at $ 42.6

billion as of June 2007.21 Remittances from Indians working overseas also saw anincrease to reach $ 27.2 billion in 2006-07 compared to $ 24.1 billion in 2005-06(Refer Exhibit VI for remittances to India between 1990-91 and 2005-06, and

Exhibit VII for the source regions of remittance flows to India in November

2006).

18 Global depositary receipt or GDR is a bank certificate issued in more than one country forshares in a foreign company. The shares are held by a foreign branch of an internationalbank. The shares trade as domestic shares, but are offered for sale globally through thevarious bank branches. (Source: www.investopedia.com)

19 American Depositary Receipt or ADR is the ownership in the shares of a foreign companytrading on US financial markets.

20 Indias External Debt as at the End of June 2007, http://rbidocs.rbi.org.in, September 28,2007.

21 Indias External Debt as at the End of June 2007, http://rbidocs.rbi.org.in, September 28,2007.


10/23


256

Exhibit VI

Remittances to India in Billions of US Dollars, 1990-1991 to 2005-2006

Source:Muzaffar A. Chishti, The Phenomenal Rise in Remittances to India:A Closer Look, www.migrationpolicy.org, May 2007.

Exhibit VII

Source Regions of Remittance Flows to India in November 2007

North America Europe East Asia South America

Others Africa Gulf countries

Source: Muzaffar A. Chishti, The Phenomenal Rise in Remittances to India: A

Closer Look, www.migrationpolicy.org, May 2007.


11/23


257

Export growth also contributed to Indias increasing foreign exchange reserves. ITand business-process outsourcing (BPO) exports increased rapidly in 2006-07 to cross$ 31.9 billion, a year-on-year increase of around 32 percent.

Some analysts were of the view that the slowdown in the US economy was the primaryreason for the dollar inflow into emerging economies, including India. According toAvinash Vashistha, MD, Tholons, a global services and investment consulting firm, Thisscenario will continue considering that India is booming and interest rates are high here,while the US economy is facing a slowdown and interest rates are falling.

22The dollar

also depreciated against other major currencies. Between August 2006 and August 2007,the euro appreciated against the dollar from 0.78 to 0.73, the British pound appreciatedfrom 0.53 to 0.49, and the yen appreciated from 117.35 to 115.83.

The sub prime mortgage crisis in the US was another reason for the large dollarinflows in to India. While the U.S. has managed such monetary fluctuations in the

past (sub prime crisis), in the present context, there are impacts on India and otheremerging markets and the government will carefully study the rupee movement and to

what extent we can stand the current liquidity surge and hot capital inflow, withoverseas financial institutions looking here for better returns, said ParthasarathiShome, Advisor to the Union Finance Minister.23The increase in oil prices resulted inincreased liquidity in the Gulf countries, and some of this was also believed to be

being diverted to India.

The increased inflow of dollars into the Indian market certainly put upward pressureon the rupee. This upward pressure was not neutralized, because the RBI, which tilllate 2006 had been following the policy of managed float in the foreign currencymarket, decided in September 2006 to stop intervening in the foreign exchangemarket. Apparently, the RBIs decision not to intervene was taken in order to controlthe inflation rate, which had begun to be a cause of concern to the central bank as wellas the government. In early 2007, the inflation rate, as measured by the wholesale

price index (WPI)

24

, hovered around 6-6.8 percent, well above the level of 5-5.5percent acceptable to RBI. On February 15, 2007, inflation reached a two year high of6.73 percent (Refer Exhibit VIII for the inflation rates between August 2006 andAugust 2007). By allowing the rupee to appreciate, the RBI hoped to control inflation

by making imported goods cheaper. Also, the rise in the value of the rupee wasexpected to make some Indian export items, especially food products, less competitivein overseas markets, thus forcing exporters of these products to release them in thedomestic market. This was expected to increase the supply of goods and bring downdomestic prices.

Previously, whenever there had been upward pressure on the rupee, the RBI wouldbuy dollars from the market. This resulted in an equivalent amount of rupees beingreleased into the domestic market (as domestic money supply is related to the RBIsreserve holdings). To absorb this oversupply of rupees, the RBI had been selling

government bonds under the market stabilization scheme (MSS). However,sterilization, as this process was called, led to the oversupply of government bonds inthe market thus bringing down their prices. As bond prices share an inverse relationwith interest rates on bonds, any fall in bond prices would translate to higher interest

22 Mini Joseph Tejaswi, Rupee Appreciationto Hit Software Cos,www.economictimes.indiatimes.com, March 29, 2007

23 Tackling U.S. Sub-prime Crisis in India, www.hindu.com, October 6, 2007.24 The Wholesale Price Index (WPI) is the index that is used to measure the change in the average

price levels of goods (both agricultural and industrial) traded in the wholesale market (comparedto the base year 1993-94). In India, the WPI is taken as the indicator of the rate of inflation andincludes in all 435 items.


12/23


258

rates. And the increase in interest rates attracted more capital inflows from abroad,with the RBI forced to repeat the sterilization process. This unending process wasanother reason why the RBI decided to stop intervening in the foreign exchange

market.

Exhibit VIII

Inflation Rates in India

Year Month Inflation rate* (In %)

2006 October 5.09

November 5.30

December 5.58

2007 January 6.58

February 6.10

March 5.74

April 5.66

May 4.85

June 4.27

July 4.45

August 3.52

* As of last week of the month

Source: http://finmin.nic.in.

The trend of steady month-on-month appreciation of the rupee began in September2006 and continued through the first eight months of 2007. By August 2007, therupee-dollar exchange rate reached 40.63, from 46.45 in August 2006.

Effects on the Economy

The rupees appreciation against the dollar was seen to be beneficial to the Indianeconomy in some ways, and detrimental in other ways. The rise in the value of rupeemeant that inflation was curbed. The inflation rate in India declined from 6.73 percentin February 2007 to 4.10 percent in August 2007. A strengthening rupee broughtdown the price (in rupee terms) of food products. A serious supply shortage of food

products was believed to be the primary reason behind the inflation rate increasing in

the first half of 2007. The rupees appreciation also cushioned the impact ofincreasing crude oil prices in the international market.

The rupees appreciation also benefited importers as well as manufacturers whodepended on imported raw materials. Companies in sectors such as oil and gas,automobile, engineering and aviation were able to import items at much cheaper rates(in rupee terms) than before. As the procurement prices of oil companies depended oninternational crude oil prices, which were denominated in dollars, the rupeesappreciation absorbed some of the international price escalation. This was a welcomedevelopment as the public sector oil companies had been incurring losses

25. The dent

25 In India, the retail price of petrol and diesel is determined by the government. Owing topolitical compulsions, the government had more or less frozen petrol and diesel prices. With


13/23


259

would have been larger had not the rupee appreciated,26

a senior oil company officialsaid.

Similarly, companies importing cement saw their net payments (in rupees) for importsreduce. The capital goods sector also benefited.

As with oil, in the case of some other commodities too, the rupees appreciationreduced the impact of increases in their international prices. The currency appreciationwas also a positive for the governments financials. The rupees appreciation reducedIndias external debt. As on December2006, India had an external debt of $ 142.65

billion which decreased to $ 132.66 billion following the rupees appreciation.

Companies that had borrowed in dollars from international banks also benefited fromthe rupees appreciation as the rupee value ofthe loans decreased.

As a result of the rupees appreciation, Indian tourists traveling abroad saw theirrupees stretch a bit further than before. Vishal Suri, COO of Thomas Cook India, said,Though no immediate effect is seen in travel packages, it (rupee appreciation) will

give Indians the freedom to spend more while traveling. The overall sentiment isgoing to be positive for all markets, be it the US, Far East or Europe, as mostdestinations have dollar as a common currency for conversions.

27

However, the rupees rise against the dollar was beginning to have an adverse impacton the Indian export sector. Around 86 percent of Indian exports and 89 percent ofimports were denominated in dollars (2005-06 data)

28 and with the rupee

strengthening against the dollar, Indian products were becoming more expensive inoverseas markets, thus adversely affecting their international competitiveness. Thecumulative export growth for the period April-August 2007 declined to around 18

percent, compared to around 24 percent in the corresponding period in 2006. TheRBIs deputy governor, Rakesh Mohan, referred to the effects of the rupeesappreciation on the countrys export sector as a case of Dutch disease.29

According to an Associated Chambers of Commerce and Industry of India(ASSOCHAM) study,30

the export sectors affected most as a result of the appreciationof the rupee were IT and IT-enabled services, textiles, leather, and sugar.31 Therupees appreciation also affected the profitability of exporters of meat and spices.The pharmaceutical sector was also moderately affected.

increase in the international price of crude oil, the losses incurred by the public sector oilcompanies were mounting.

26 Richa Mishra, Oil Cos: Rupee Gain Softens Impact of Crude Prices,www.thehindubusinessline.com, May 23, 2007.

27 Shubhra Tandon, Re Appreciation a Boon for Outbound Tourism,www.thehindubusinessline.com, September 22, 2007.

28 Indian exports and imports in euros accounted for 8 percent and 7 percent respectively of all

exports and imports.29 The term Dutch Disease was coined by The Economist in 1977 to describe the decline of the

manufacturing sector in the Netherlands after the discovery of natural gas in the 1960s. Theeconomic model describing Dutch disease was later developed by W. Max Corden and J.Peter Neary in 1982. The model describes Dutch Disease as the adverse effect on anysector(s) of an economy caused by large inflow of foreign currency in to the economy andappreciation of the domestic currency.

30 The Associated Chambers of Commerce and Industry of India (ASSOCHAM) wasestablished in 1920 by promoter chambers representing all regions of India. It is Indiaspremier apex chamber with membership of over 100,000 companies and professionalsacross the country. (Source: www.assocham.org)

31 Rupee Appreciation to Result $15 bln Fall in Exports in 2007-08, www.indiantaxsolutions.com,July 7, 2007.


14/23


260

As a high percentage of revenues in most IT and some pharmaceutical companies

were in dollar terms, any appreciation of the rupee affected their revenue realization

and consequently their profit margins. V Balakrishnan, Chief Financial Officer of

Infosys Technologies Ltd (Infosys),32 said, In spite of taking forward cover andhedging $ 373 million during the quarter under review, the rupee appreciated to Rs

44.53 from Rs 46.29 and impacted our operating margins by 200 base points (two

percent) and led to a revenue loss of Rs 1.45 billion.33

According to US Department of Commerce data, Indias textile and apparel exports to

the US declined by 0.21 percent in the first half of 2007, even when USs to tal textile

imports increased by 5.70 percent in the same period. China was able to increase its

textile exports to the US by 33.78 percent, Vietnam, by 21 percent, Cambodia, by 18.5

percent, Indonesia, by 16.5 percent, and Bangladesh, by 13.6 percent34(Refer Exhibit

IX for the exchange rate of dollar against currencies of some of Indias

competitors).

Exhibit IX

The Exchange Rate of Dollar against Currencies of some of Indias

Export Competitors: August 2006-August 2007

Country Currency Exchange rate against dollar

August 2006 August 2007 Appreciation in %

Pakistan Pakistan Rupee 60.310 60.642 (-0.55)

Bangladesh Taka 69.110 68.775 0.48

China Renminbi Yuan 7.958 7.547 5.16

Sri Lanka Sri Lankan Rupee 102.51 113.01 (-10.24)Vietnam Dong 16,010 16,236 (-1.41)

Indonesia Rupiah 9101 9389.6 (-3.17)

Malaysia Ringgit 3.680 3.501 4.86

Source: www.x-rates.com and www.gocurrency.com.

In the 11thFive Year Plan, the Indian government had set an apparel export target of 6

billion pieces at $ 34.02 billion by 2011-2012. However, according to Amit Goyal,

President of Confederation of Indian Apparel Exporters (CIAe) 35, with the rupee

appreciating against the dollar, India would not be able to reach the export level of

even the previous year.36

He also said that considering the fact that employment in the

sector depended directly on export orders, the decline in export orders wouldadversely affect employment in the sector. Prakash Thakkar, Managing Director of Jal

32 Infosys Technologies Ltd. is a leading provider of consulting and IT services globally.33 A Record Appreciation of the Indian Rupee in the Forex Market by 3.8 Percent Dampening

IT Outsourcing Margins, www.indiadaily.com, January 11, 2007.34 Sanjeev Choudhary, Rise in Rupee, Sluggish Sales Take Toll on Apparel Exports to US,

www.economictimes.indiatimes.com, August 27, 2007.35 The Confederation of Indian Apparel Exporters or CIAe is an industry association of

garment exporters, set up in 2001.36 India: Apparel Exporters Reel under Severe Order Crunch, CIAe, www.fibre2fashion.com,

October 11, 2007.


15/23


261

Exports, said, I am willing to close down. In fact, I have started to reduce my

business, reduce my staff to ensure a smooth exit from the apparel export businessI

believe the worst is yet to come.37

The strengthening of the rupee against the dollar also affected exporters of plantationcrops. Monthly tea exports declined from 106.6 million kg in January 2007 to 86.1million kg in July 2007. Coffee exports also fell from 199,761 tons in January-September 2006 to 176,699 tons in January-September 2007. Ashok Kurian,Chairman of the Specialty Coffee Association of India, said, Nearly 80 percent of 3lakh (300,000) ton coffee produced annually in India is exported. We do not have astrong domestic market and our dependence on the export market exposes us tocurrency fluctuations.

38

The rupees appreciation made Indian cashew exporters vulnerable to competitionfrom Vietnam and Brazil; and Indian sugar companies lost export orders to companies

based in China and Thailand. With the rising rupee, Indian pharmaceutical companiestoo were expected to lose their competitiveness to Chinese and East European

companies.The rupees appreciation also affected the export competitiveness of the MSMEs,which accounted for around 34 percent of national exports. According to theConfederation of Indian Industrys (CII)

39 19

thBusiness Outlook Survey, more than

50 percent of the respondents from MSMEs expected a negative impact on theirbusiness because of the appreciation of the rupee.

40

Employment in various export sectors was expected to decline. According to the studycommissioned by the commerce ministry, the rupees appreciation resulted in 11,000

job losses in the textiles and garment sector and 1,900 job losses in the leather sectorin March-June 2007.

41

However, companies that were both importers and exporters were not hurt by theappreciation of the rupee. For example, the gems and jewelry sector, which imported

unpolished gems and bullion metals and exported polished gems and jewelry, seemedto have withstood the impact of rupee appreciation.

With the rise in the value of the rupee, foreign tourists found it more expensive tocome to India. This was expected to have a negative impact on the tourism industry.According to Himmat Anand, Chief Operating Officer of SITA42 in India & SouthAsia, The weak dollar is bound to affect the inbound travel, which can become lessattractive for travelers.

43

37 India: Apparel Exporters Reel under Severe Order Crunch, CIAe, www.fibre2fashion.com,October 11, 2007.

38 Coffee, Tea Exporters Feeling Rupee Rise Heat, www.livemint.com, September 27, 2007.39 The Confederation of Indian Industry (CII) was founded in 1895. It is a non-government,

not-for-profit, industry led and industry managed organization. It has direct membership ofover 6,500 organizations from the private as well as public sectors, including SMEs andMNCs, and an indirect membership of over 90,000 companies from around 350 national andregional sectoral associations. (Source: www.ciionline.org)

40 India: Rupee Appreciation Unable to Stem MSME Export, www.fibre2fashion.com,October 2, 2007.

41 Mahendra Kumar Singh, Strong Re May Shave off USD 13b Exports,www.timesofindiaindiatimes. com, July 26, 2007.

42 SITA Inbound is one of the largest Indian companies in the tourism industry. It operatesinbound tours to India from all over the world, with tour operations and marketing activitiescentralized at their head office in New Delhi. (Source: www.sitaindia.com)

43 Shobha Kannan, Strong Re, Overpricing Likely to Hurt Inbound Tourism,www.thehindubusinessline. com, October 9, 2007.


16/23


262

Some Perspectives

The trilemma or the impossible trinity as economists sometimes called the

management of exchange rate, interest rate, and inflation rate, has always posedproblems for central banks the world over; and the RBI was not an exception. The

central bank of any country has to ensure that the interest rates keep inflation in check,but at the same time do not stifle investment; the exchange rate promotes exports, not

stifle them; and lastly the exchange rate and the interest rate manage capital inflows

without restricting them. This was a challenge for the central banks of even the highly

developed economies of western countries. However, analysts were of the view that,

largely, the RBI had been managing the trinity quite well for the last few years, atleast until inflation levels started rising in early 2007.

Most analysts were of the view that the RBIs first priority should be to rein in

inflation and they supported RBIs policy of non-intervention in the foreign exchange

market. However, some were of the view that the RBI should have let the rupee

appreciate gradually rather than leave the rupee to the mercy of market forces. Citingthe example of China, analysts explained that though that country attracted far more inforeign investment than India, its currency appreciated only by around 2% (between

March and July 2007).

Some analysts were of the view that the rupees appreciation was positive as it would

put pressure on exporters to improve, update, and modernize. They cited the example

of the Japanese export industry in the 1990s, when it faced an appreciating yen, fromnearly 230 yen to a dollar to around 130. The Japanese export industry responded by

improving its productivity and introducing product innovations. Indian exporters, they

said, too should view the rupees appreciation as a challenge. They however agreed

that the government had a significant part to play and should invest in infrastructure as

well as in education and training of human resources. Kamal Nath (Nath), Minister of

Commerce & Industry, while agreeing with exporters that the appreciation of therupee against the dollar was a major concern, asked them to make efforts to improve

efficiency. He said, Rupee rise is no doubt a problem, but it is also an opportunity for

all of you to move towards greater efficiency, reducing costs and enhancing

competitiveness.44However, in July 2007, he announced some measures to offset the

negative impact of rupees appreciation on Indias exports (Refer Exhibit X for the

recommendations of the Ministry of Commerce).

Some analysts advised exporters to decrease their dependence on dollars, asking them

to shift their invoicing to more stable and balanced currencies like the British pound

(Refer Exhibit XI for the exchange rate of the rupee with some major currencies

between January 2007 and August 2007). Others felt that exporters should reduce

their dependence on the US market. Commenting on a possible way out for textile

exports, D K Nair, Secretary General of Confederation of Indian Textile Industry(CITI)45, said, It is evident that the textile industry has to cope up with the rupee

appreciation and for that defocusing of the US market and currency is one strategy

that the industry will have to adopt. Few industry players are already looking for other

44 Kamal Nath Announces Package to Counter Impact of Rising Rupee on Exports -AssuresExporters of All to Reach Export Target of US $ 160 Billion, www.commerce.nic.in, June13, 2007.

45 Confederation of Indian Textile Industry (CITI) is a trade association of cotton, blended andman-made yarn spinning mills and fabric manufacturers. (Source: www.citiindia.com)


17/23


18/23


264

Exhibit XI

The Exchange Rate of Rupee against some Major Currencies

between January 2007 and August 2007

Currency Exchange rate Appreciation

January 2007 August 2007

Pound 86.594 82.005 5.29

Euro 57.450 55.419 3.53

Yen (100) 365.234 350.673 3.98

Australian Dollar 34.166 33.110 3.09

Canadian Dollar 37.473 38.432 (-2.55)

Source: www.x-rates.com and www.gocurrency.com.Some were of the view that Indian companies as well as the government could ease

the upward pressure on the rupee by investing in assets abroad. The central bank had

been easing restrictions on outward investment, with total international assets of India

in the last five years (between 2001-02 and 2006-07) increasing at an annual

compound rate of 24.2%. However, there was room for further liberalization of

norms. Others felt that as the continued appreciation of the rupee was expected to

make ECBs more attractive for Indian companies, even at an unchanged interest rate

differential, the RBI should impose tighter restrictions on ECBs so as to control dollar

inflows.

Outlook

In June, 2007, the Economist Intelligence Unit49estimated that for the year 2007, therupees average annual exchange rate against the dollar would be 41.3 (a 13.5 percentreal appreciation year on year), and for the year 2008, it would be 40 (6 percent).

50

In the third week of September, 2007, the US Federal Reserve cut interest rates. Thissaw FIIs flock to emerging markets, including the Indian market. Between mid-September and mid-October 2007, over $ 6.6 billion was injected into the Indianmarket.51

In September, 2007, in an effort to placate exporters, the government reimbursedservice tax paid by exporters for port, road transport and rail services (Refer ExhibitXII for the measures taken by the government). However, exporters were notsatisfied with the announcement, saying it was too little too late. Ganesh K. Gupta,

President of FIEO, said, The packages announced by the government [have] not beenable to offset our losses. The way the rupee is rising, it would be negating not only theexports but wipe them out. I think now it is time the Prime Minister intervenes andtakes up the matter seriously.

52

49 The Economist Intelligence Unit, founded in 1946, is a leading research and advisory firm,with more than 40 offices worldwide.

50 India Finance: Rupee Dilemma, www.viewswire.com, June 26, 2007. 51 2007 FII Inflows Hit $16 Billion, www.indianexpress.com, October 12, 2007. 52 Steps Soon to Address Rupee Appreciation: Kamal Nath, www.andhracafe.com,

September 20, 2007.


19/23


265

Exhibit XII

The Measures taken by the Government

1. Increasing the number of Services for refund/exemption of Service Tax inrespect of Exports.

The list was expanded to include three new services general insurance service,technical testing and analysis service, technical inspection and certification service.Exporting community was to be exempted from paying service tax for theseservices.

2. Provision to pay Interest on EEFC balances.

The government decided to allow interest to be paid on Exchange Earners ForeignCurrency (EEFC) accounts.

Interest should be permissible on outstanding balances to the extent of $ 1million per exporter

Rate of interest may be determined by the banks.This measure would be valid up to October 31, 2007.

Such accounts should be in the form of term deposits with a maturity of upto one year.

3. Interest on pre-shipment and post-shipment credit (extension of period &widening of coverage of sectors).

The applicable interest rate on pre-shipment credit up to 180 days and post-shipment credit up to 90 days was Benchmark Prime Lending Rate (BPLR) minus2.5%. In July 2007, the government announced a reduction of this maximum rate toBPLR minus 4.5% in respect of the outstanding amount for the period April 1 toDecember 31 in 2007. The government agreed to provide the requisite interestsubvention of 2% points to scheduled commercial banks. This dispensation was

made available to the sectors of textiles including handlooms and readymadegarments, leather products, handicrafts, engineering products, processedagricultural products, marine products, sports goods, toys and all exporters from theSME sector. Now, it was decided that the coverage would be expanded to thesectors of jute and carpet, processed cashew, coffee and tea, solvent extracted de-oiled cake and plastics and linoleum. The period for which the reduction in theinterest rate is applicable, is now extended from December 31 to March 31, 2008.The amount of subvention will be calculated on the amount of export credit fromthe date of disbursement up to the date of repayment or up to the date beyondwhich the outstanding export credit becomes overdue i.e. for pre-shipment creditup to 180 days and post-shipment credit up to 90 days, whichever is earlier.

4. Rs 3 billion more for Vishesh Krishi and Gram Udyog Yojana (VKGUY).

The product coverage under VKGUY, a scheme to promote export of agriculturaland village industry products, was expanded to include additional products. For this

purpose, the revenue ceiling fixed for 2007-08 was raised by Rs 3 billion (from Rs2 billion to Rs 5 billion).

Source: Govt Steps to Counter Rupee Appreciation, www.tradeindia.com, October8, 2007.

In response to the demand for government intervention, Nath said, The rising rupeeis a matter of concern. The government is very much looking at it and it needs a newresponse.

53Chidambaram also said that if the package offered to exporters did not

53 Steps Soon to Address Rupee Appreciation: Kamal Nath, www.andhracafe.com,September 20, 2007.


20/23


266

address their problems, the government would think of coming up with a moresuitable package. However, he advised exporters to learn to hedge and reprice theirexport contracts.

In August 2007, the RBI again began to intervene in the foreign exchange market bypurchasing dollars. The RBI also made it more difficult for Indian firms to borrow inforeign currency. In an effort to check capital inflows, the RBI introduced new rulesconcerning ECBs. Henceforth, companies wishing to go in for ECBs (to be used asrupee expenditure) were required to take prior approval from the RBI. The RBI also

placed a limit of $ 20 million per company per financial year. While ECBs of up to $20 million per company to be used as foreign currency expenditure for specified end -uses was to come under the automatic route, ECBs of more than $ 20 million was torequire special RBI approval. In either case, the proceeds would have to be parkedabroad. The RBI also increased the annual limit on the amount of remittances fromIndia from $ 50,000 to $ 100,000.54The RBI also increased the sterilization bond limit

by Rs 400 billion to Rs 1.5 trillion.55

In September 2007, the Finance Minister, while addressing a gathering in WashingtonD.C. said that the rupee-dollar exchange rate was market-determined and that the RBIwould do the needful to control volatility. The rupees real and nominal effectiveexchange levels are way beyond comfort levels at the moment, but that is somethingwe have to learn to live with. This is market-determined and it will be market-determined; but if there is volatility or any disorderly movement I suppose the central

bank will intervene using whatever instrument it has. The government does nothing onthat behalf, said Chidambaram.56

In October, 2007, the RBI increased the limit for bond issuance under the marketstabilization scheme (MSS)57 from Rs 1.5 trillion to Rs 2 trillion for the fiscal year2007-08.

In October 2007, the Directorate General of Foreign Trade (DGFT) carried out asurvey to study the actual impact of the rupee appreciation on industries. The

Directorate, which came under the Union Commerce Ministry, was to assess theproblems faced by the industries, including falling profitability, and job losses due tothe rupees appreciation and submit its report to the central government.

While Nath had said in September 2007 that there would be no change in the 2007-08export target, in October 2007, Commerce Secretary Gopal K. Pillai said, It looksunlikely that the $ 160 billion export target would be achieved for the current fiscal.We would be quite pleased if it reached even $ 140 billion, estimating that the localcurrency appreciates to 38 a dollar.

58

Some international institutions estimated that the RBI would not allow the rupee toappreciate further. Subir Gokarn, chief economist for Asia Pacific, Standard andPoors

59, said, We expect the Reserve Bank of India to resist appreciation beyond

current levels and the rupee will end the year at around 40.50 per dollar.60

54 Ila Patnaik, Get Real about the Impossible Trinity, www.financialexpress.com, May 24,2007.

55 Market Stabilisation Scheme: Revision of Ceiling, www.rbi.org.in, August 08, 2007.56 Rapid Rupee Appreciation Is A Matter Of Serious Concern: FM, www.newindpress.com,

September 27, 2007.57 The market stabilization scheme was introduced by the government and RBI in early 2004

to tackle strong capital inflows.58 India Unlikely to Meet Export Target, www.tradeindia.com, October 10, 2007.59 Standard and Poor is a leading credit ratings, investment research, risk evaluation, and

policy advisory company.60 Rupee Hits 9-1/2 Yr High, Stocks Support, www.livemit.com, October 10, 2007.


21/23


267

References and Suggested Readings:

1.

India: Apparel Exporters Reel under Severe Order Crunch, CIAe, www.fibre2fashion.

com, October 11, 2007.2.

India Unlikely to Meet Export Target, www.tradeindia.com, October 10, 2007.

3. Anoop Agrawal, Indian Rupee Rises as Stocks at Record Lure More Global Funds,www.bloomberg.com, October 10, 2007.

4.

Rupee Hits 9-1/2 Yr High, Stocks Support, www.livemit.com, October 10, 2007.

5.

Rupee Gains on Buoyant Local Bourses, www.myiris.com, October 9, 2007.

6.

Shobha Kannan, Strong Re, Overpricing Likely to Hurt Inbound Tourism,www.thehindubusinessline.com, October 9, 2007.

7.

Govt Steps toCounter Rupee Appreciation, www.tradeindia.com, October 8, 2007.

8.

Deepak Bansal, Appreciating INR: Industry Should Charge the Consumer Less,www.merinews.com, October 7, 2007.

9.

Hina Mahgul Rind, Rupee Stands Firm against Dollar, www.thenews.com, October 7, 2007.

10.

Gayatri Nayak, Dollar Inflows Put Govt in a Bind,www.economictimes.indiatimes.com, October 6, 2007.

11.

RBI Intervention Pulls Re Down From 9-Yr High,www.economictimes.indiatimes.com, October 6, 2007.

12.

India Wont Miss $60-B Software Export Target,www.economictimes.indiatimes.com, October 6, 2007.

13. Inflation Halts 5-Week Fall, Rises to 3.42%, www.economictimes.indiatimes.com,October 6, 2007.

14. Tackling U.S. Sub-prime Crisis in India, www.hindu.com, October 6, 2007.

15.

Rupee Gallops on MassiveCapital Inflows, www.myiris.com, October 5, 2007.

16.

TB Kapali, Rupee Appreciation Upsets Export Arithmetic,www.thehindubusinessline. com, October 4, 2007.

17.

Firms Look at Ways to Control Effects of Re Appreciation, www.economictimes.indiatimes.com, October 4, 2007.

18.

Panel Outlines Rupee Rise Solutions, www.economictimes.indiatimes.com, October 4, 2007.

19.

Managing the Rupee Rise on the Front Foot, www.economictimes.indiatimes.com,October 4, 2007.

20.

US Dollar Ends Sharply Cheaper against Rupee, www.outlookindia.com, October 4,2007.

21.

Priya Ranjan Dash, Rupee Appreciation weakens export, www.dnaindia.com, October 3,2007.

22. BPOs to Bear Brunt of Re Appreciation, www.economictimes.indiatimes.com, October 3,

2007.23. India: Rupee Appreciation Unable to StemMSME Export, www.fibre2fashion.com,

October 2, 2007.

24.

India: Textile Industry Must Cope with Rupee Appreciation CITI,www.yarnsandfibers.com, October 2, 2007.

25.

Exporters Seek Government Intervention on Rupee Rise, www.newspstindia.com,October 1, 2007.

26.

D. Murali V.R. and Vinod Kumar, Rupee Appreciation Here to stay,www.thehindubusinessline.com, October 1, 2007.

27. Prabhakar Sinha, Stronger Rupee Saves You from Jitters of Global Gold Price Rise,www.timesofindiaindiatimes.com, September 29, 2007.


22/23


268

28.

Anil Varma, Indias Rupee Heads for Biggest Monthly Advance Since April,www.bloomberg.com, September 28, 2007.

29.

Rupee Appreciation a Temporary Phenomenon: Elangovan, www.economictimes.

indiatimes.com, September 28, 2007.30.

Volume Growth Positive for IT ButRe Rise to Curb Margins, www.economictimes.indiatimes.com, September 28, 2007.

31.

Indias External Debt as at the End of June 2007, http://rbidocs.rbi.org.in, September 28,2007.

32.

Rapid Rupee Appreciation is a Matter of Serious Concern: FM,www.newindpress.com, September 27, 2007.

33. Thats It, They Just Cant Agree! www.economictimes.indiatimes.com, September 27, 2007.

34.

Coffee, Tea Exporters Feeling Rupee Rise Heat, www.livemint.com, September 27,2007.

35. Deepshikha Monga & Gaurie Mishra, Rising Re Pulls Down Stocks of US-ListedIndian IT, BPO Cos, www.economictimes.indiatimes.com, September 26, 2007.

36.

Re Rise Threatens Existence of Punjab Inds, www.economictimes.indiatimes.com,September 23, 2007.

37.

Shubhra Tandon, Re Appreciation a Boon for Outbound Tourism,www.thehindubusinessline.com, September 22, 2007.

38.

IT Faces Brunt of Rupee Appreciation, www.econmictimes.indiatimes.com,September 21, 2007.

39.

Steps Soon to Address Rupee Appreciation: Kamal Nath, www.andhracafe.com,September 20, 2007.

40.

Gary Singh, RBI has been Struggling to Work out a Way, www.nriinternet.com,September 3, 2007.

41.

Sandeep V. Arora, Where the Indian Rupee is Heading to, www.nriinternet.com,Setember 1, 2007.

42.

Rapid Rupee Appreciation a Challenge, Says Infosys CEO, www.hindu.com, August 30,2007.

43.

Sanjeev Choudhary, Rise in Rupee, Sluggish Sales Take Toll on Apparel Exports toUS, www.economictimes.indiatimes.com, August 27, 2007.

44.

Kamran Sulaimani, IT Firms to Look within to Tackle Re Rise,www.economictimes.indiatimes.com, August 10, 2007.

45.

Deepshikha Sikarwar, Ratna Bhushan & Ashish Agarwal, Industry Must Show ImportGains on Rising Re, www.economictimes.indiatimes.com, August 3, 2007.

46.

Rupee Appreciation Dents Export Growth Sharply in June,www.thehindubusinessline.com, August 2, 2007.

47.

Mahendra Kumar Singh, Strong Re May Shave off USD 13b Exports,www.timesofindiaindiatimes.com, July 26, 2007.

48.

S. Venkitaramanan, Appreciating the Causes and Effects of Rupee Appreciation,www.thehindubusinessline.com, July 23, 2007.

49.

Mitu Jayashankar, No Model Can Sustain 9% Re Rise,www.economictimes.indiatimes. com, July 20, 2007.

50.

Ratna Ganguli, Exports Sops Elude Herbal Products,www.economictimes.indiatimes.com, July 17, 2007.

51.

K A Badarinath, Moderating the Appreciation in Re, www.economictimes.indiatimes.com, July 16, 2007.

52.

Rajeev Malik, Indias Handling of Rupee Remains a Riddle, www.rediff.com, July 14, 2007.

53.

Rupee Appreciation to Result $15 bn Fall in Exports in 2007-08,www.indiantaxsolutions.com, July 7, 2007.


23/23

Date post:	02-Jun-2018
Category:	Documents
Upload:	ashmit
View:	223 times
Download:	0 times

Case 1 the Indian Rupee US Dollar ExchangeCurrency

Documents