Depreciating Indian Rupee : Problems in Indian Economy

AGENDA

TEAM

PROBLEM INTRODUCTIONDESCRIPTIONINR VALUE DETERMINATIONAFFECTS ON INDIAN BUSINESS

BALANCE OF TRADE ISSUEOIL IMPORTSGOLD IMPORTS

LACK OF CAPITAL INFLOWS

ROLE OF RBI AND GOVERNMENT

TEAM

Team

• Ankit Ahuja ankit.ahuja15@sibmpune.edu.in

• Ankit Kawad ankit.kawad15@sibmpune.edu.in

• Angshuman angshuman.kar15@sibmpune.edu.in

• Akumtoshi akumtoshi.poengar@sibmpune.edu.in

PROBLEM INTRODUCTIONDE SCR IPTIO N, INR VA L UE DE T E R MINAT ION A ND E FFE CT S O N B USINE SS

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

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

BALANCE OF TRADE PROBLEMO IL IMPO R T S ISSUE

Balance of Trade – Imports vs Exports

Oil Imports

BALANCE OF TRADE PROBLEMG O L D IMPO R T S A ND L ACK O F CA PITA L INFLO WS

Gold Imports

•950 Tons of estimated imports this year

• 10% of Import bill , 75% of Imports as Jewelry

•33% of World’s demand

•Villainous figure in CAB

•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 & ADMINISTRATORR O L E O F R B I A ND G OVE R NMENT

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 exchange markets in order to create an stable and active exchange market

Role of Government of India

Control measures for Currency

Fiscal

Monetary

EximPolicy

THANK YOUAnkit Ahuja@ankitanks