Myth_buster_1
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This is one field where India deserves to have a big round of applause for having one of the best economy.
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I haven't seen what components rose. Sometimes when a currency appreciate wrt Dollar, so does the total forex. Value of gold also appreciates these are already held and when we read please do keep in mind that these include a lot of deposits. So, the government may not really control every cent in the Forex.Why are we letting our currency weaken so much and making imports expensive ? Why is the rbi buying dollars and depreciating the rupee ?
More than half are in European banks. Even our 300 tonnes of gold is in some royal bank in London.Curious...where are these reserves held? Indian banks in India or all over the world?
Just checked a article, rbi bought 8 b $ worth last week.I haven't seen what components rose. Sometimes when a currency appreciate wrt Dollar, so does the total forex. Value of gold also appreciates these are already held and when we read please do keep in mind that these include a lot of deposits. So, the government may not really control every cent in the Forex.
I don't think RBI is buying the dollar and letting the forex swell. RBI has let the market control the value of Rupee and does not intervene by burning through USD just to keep Rupee appreciated that's why when the Pandemic started Rupee depreciated because borders started dropping Rupee and started buying other assets. Say Gold, Dollar...
I doubt. Mostly in us bonds.More than half are in European banks. Even our 300 tonnes of gold is in some royal bank in London.
Just checked a article, rbi bought 8 b $ worth last week.
Our foreign currency increased by 8.4 b usd last week and gold went down by 300 m usd.
https://m.rbi.org.in/Scripts/WSSViewDetail.aspx?TYPE=Section&PARAM1=2#
https://www.google.com/amp/s/wap.bu...-t-let-rupee-rise-experts-120061200085_1.html
I dont support a rich government and a poor people. By weakening the rupee, common mans spending power reduces , as we consume a lot of imported stuff , including fuel.
I doubt. Mostly in us bonds.
@Indians pechay le lo pechay yeh saray paisay. gareeb toh kutay ke mout marta rahay ga india main uos per kharch paisay nahe hotay keia faida aisay paison ka jab gareeb ghar jata road per mar jai yah bhook say train main
I don't understand this hoarding of so much foreign exchange, while weakening our currency ?
We arnrt exactly a export oriented country that needs to continuously weaken its currency to remain competitive.
Since we import more than we export, why make the imported stuff unnecessarily expensive for the common man ?
@Nilgiri
Indian rupee has decreased in value from 70 to 75 per dollar. RBI used to intervene to stabilize the Rs , buying excess dollars to prevent appreciation of the rupee and selling if the Rs depreciated too fast.Not exactly sure what you are asking (given purpose of forex).
Let me ask how much would you think/feel is a more ideal amount to keep in total?
Indian rupee has decreased in value from 70 to 75 per dollar. RBI used to intervene to stabilize the Rs , buying excess dollars to prevent appreciation of the rupee and selling if the Rs depreciated too fast.
Now the market is getting flooded with dollars because of investment and instead of maintaining around it around 70 , rbi has mopped up a lot of dollars and allowed the Rs to slide to 75.
What's the point since we are not a export dependent economy and dont need such a weak Rs ? Its just making the imports unnecessarily expensive.
And their is a cost associated with keeping excess foreign exchange as its a unproductive asset. Its not as if rbi gets a heavy interest on it.
If it were up to me, I'd move it closer to Rs 80. Need to move to manufacturing. It's a priority.70 - 75 (5 rupee scale) is acceptable window to swing in in my estimation. But I have not really surveyed enough industries and consumers myself....on the ground to give some absolute stamp of approval on the basic "setting" of it to begin with. I rely on others doing that and being honest/transparent/credible enough for it...it must always be said.
Structurally we are trying to help export sectors too....i.e we dont want to stay "import-reliant" to this degree we are now....not this decade when we must focus to transition from 50% agri labour force to say half of that...say 25%.
Something needs to volumetrically supply those more productive man hours for better initial bargaining/incorporation in current snapshot profile....establishment of which is then harnessed to supply even more productive man hours later....so that there is good efficient market price and large quantity consumption of it in market (since we have deemed this as a whole to be better goal/objective for society)....with the basic idea that the larger bulk of more ready (developed) consumers of the more productive man hours lie outside the (developing) country.
i.e More people making more tomorrow of what they fork over today from outside country....is a proven low hanging fruit for it....especially for current state (and short-mid term projection) of India's bureaucracy + corporates.
Higher hanging fruits (say a massive, bulked intellectual revolution or ignition of self-sustainable autarky revolution etc etc... to bypass this basic world currency-driven "consume first, supply with time" tech transfers) that could come about somehow in a purely stable consumption driven status quo are much harder....some are likely to be impossible altogether (this was what cold war experiments with non-market systems was all about)....especially when you factor in how humans operate (when no/little pressure is given) in bureaucracy and corporate structure.
Its about balance in the end.
There are pros and cons to every level of forex relative to basic fiscal scope, size and buffer of the country....and what the strategy (directed to future and accumulated from past) is.
Also consider what is leveraged on the forex (for further foreign loans/investment assurance etc). Its not some liquid cash pile of USD Benjamin notes at all...rather most of it is locked store values with maturities of different lengths. It affects how you can deploy them and the policy intensities and inertias. This is all what is analysed by RBI for example....largely behind the scenes...and they give the larger policy thresholds and settings for the bureaucrats and politicians....who impose their counter-pressure, action-directive and feedback on it.
BTW, you have given me an opportunity to flesh out some (larger + generic) thoughts to myself on this that may be of interest to others. It applies to all countries in general today.
@Joe Shearer @Jungibaaz @jaibi @Socra @farhan_9909 @VCheng
@PanzerKiel (not sure if you have taste for economic policy/theory matters....reply if you do )
If it were up to me, I'd move it closer to Rs 80. Need to move to manufacturing. It's a priority.
Well why not move it to Rs 90 or Rs 100?
There is plenty to do first within this setting we have now before we fiddle too much with this lever and ignore the costs and current needs of current people on ground. Balance like I said....and the best people find and understand balance in all that they do...the best way to find greater truth imo.
There is afterall no totalitarian setup to start sending tanks and machine-gun grunts to "deal" with demonstrators that gather in city squares...say if they cannot consume basic foodstuffs, energy and things like that (to subsist on) because you drastically pushed a big buffer space for higher order corporate development for the long term stuff (as well intended you may have been)....when you could have done a bunch of other things first instead (and get your own bureaucrats in better line and shipshape for example).
For good reason too.
This was the bad driving force of demonetisation for example and leaving better crucial reforms to gather dust still (it is becoming increasingly apparent to me, I was far more neutral and wait+see for it in the past)...I dont want these ham-fisted sanghi-stronk fellows having yet another lever (this time INR setting + complete diktat to RBI as you hypothesize here) to do real damage for some mere political gain and emboldening.
Thankfully they dont have it....India just isnt that kind of CA surplus country at all. They are forced to operate within these constraints imposed and baked in by betters before them (that also stayed well away form totalitarian thought too...whew!)
Mm op op
Quite rich coming from a Pakistani.