7/31/2019 Depreciating Rupee Value

1/17

GROUP-5

Hemavani-1103014

Mohd Sarwar Hussain-1101050

Shivanand-1101089

Shanti priya-11030Sharath chandhra-11030

Shruti-11030

7/31/2019 Depreciating Rupee Value

2/17

Introduction Rupee depreciation means that rupee has become less

valuable with respect to dollar.

A currency will tend to become more valuable when itsdemand is higher than supply. It is the basic theory.

Rupee > 55.75

8/13/2012 2

7/31/2019 Depreciating Rupee Value

3/17

Past Trend

8/13/2012 3

7/31/2019 Depreciating Rupee Value

4/17

Reasons for depreciation

ForeignDirectInvestment

Foreign

InstitutionalInvestments

Demandand Supplyof Dollar,

Rupee

RBI

regulator participant

8/13/2012 4

7/31/2019 Depreciating Rupee Value

5/17

Reasons (Cont.)Rise in crude oil prices

sudden increase in gold investmentsby Indian savers

Euro Crisis= US benefited

Indias fiscal deficit widening

8/13/2012 5

7/31/2019 Depreciating Rupee Value

6/17

Fish bone structure

8/13/2012 6

7/31/2019 Depreciating Rupee Value

7/178/13/2012 7

The current account is the account that

shows the imports and exports of goods and

services.

The capital account is the account that shows

the money invested by foreigners in India,and money invested by Indians outside the

country.

7/31/2019 Depreciating Rupee Value

8/17

EURO CRISIS Greece's problems

Austerity drive: drastic spending cuts, tax rises, and

labor market and pension reforms.

If Greece does not repay its creditors, Italy & Spain will

be affected.

8/13/2012 8

7/31/2019 Depreciating Rupee Value

9/17

Europe has two drastic choices:

To create one country by integrating budgetary policy

To separate to single currencies.

8/13/2012 9

7/31/2019 Depreciating Rupee Value

10/17

HOW CURRENCY DECLINE MAY HURT ?

Investments

Imported items

Foreign travel

Education abroad

8/13/2012 10

7/31/2019 Depreciating Rupee Value

11/17

WHO WILL BENEFIT?

Remittances

Investments

Foreign tourists

Stocks

8/13/2012 11

7/31/2019 Depreciating Rupee Value

12/17

Steps by GovernmentRBI allowing banks to setNRE deposits rate

Rupee depreciated by 9%from January

Profit nullified

8/13/2012 12

7/31/2019 Depreciating Rupee Value

13/17

How to tackle Rupee depreciation ?

Promote exports by cutting red tape

Focus on fast-tracking infrastructure projects

Face inflation

8/13/2012 13

7/31/2019 Depreciating Rupee Value

14/17

Cont Curbing fiscal and current deficit can also go a long

way in supporting rupee.

Phasing out of subsidies in a gradual manner shouldreduce fiscal deficit eliminating the need of deficitfinancing and thereby excess money supply in theeconomy.

Providing tax sops to exporters and access to cheapcredit

8/13/2012 14

7/31/2019 Depreciating Rupee Value

15/17

HOW YOU CAN PLAY THE RUPEE?

Currency futures

Mutual funds

8/13/2012 15

7/31/2019 Depreciating Rupee Value

16/17

References

www.assocham.org

articles.timesofindia.indiatimes.comwww.hindustantimes.com

www.cigionline.org

8/13/2012 16

http://www.assocham.org/http://articles.timesofindia.indiatimes.com/http://www.hindustantimes.com/http://www.cigionline.org/http://www.cigionline.org/http://www.hindustantimes.com/http://articles.timesofindia.indiatimes.com/http://www.assocham.org/http://www.assocham.org/

7/31/2019 Depreciating Rupee Value

17/17

8/13/2012 17