RUPEE IS UNDERVALUED?

A currency with an exchange rate lower than it ought to be is undervalued currency. A currency may be undervalued when its purchasing power, supply and demand are all strong, but still its price is comparatively low.

The rupee has been falling sharply over the past couple of months prompting experts to say it is now overshooting. A currency is said to be valued fairly if the REER (six currency index) Index is close to 100. When REER goes above the 100 mark, the currency is termed to be entering over valued zone and when it goes below 100, it […] Read more

Rupee may fall to 70 per Dollar

The strong dollar put pressure on most major & emerging currencies, rupee was the worst hit in Asia. The rupee has lost nearly 3 percent in the month of July alone. The next trigger for the rupee will now come from the FOMC policy minutes on July 10 and that would set the direction for most assets.
there are reports of the Reserve Bank of India (RBI) intervening at 61.20 levels, the markets haven’t taken these interventions seriously. After a short bout of gains, the currency continued to remain weak.
We import 80 per cent of our crude requirements and so dollars […] Read more

BENEFITS OF RUPEE DEPRECIATION TO INDIAN HOTELS

India’s luxury hotels, which have overseas operations have gained with depreciating value of rupee. Stock of East India Hotels has increased in last one month. The stocks of Indian Hotels have surged up to 15% in last one month while stocks of EIH has appreciated by 5%.
It is being observed that tariffs of luxury hotels have become economical in dollars for foreign tourists. And for Indian hotels foreign tourists account for 60% of the total demand. Indian Hotels is clocking an average occupancy rate of 65%.

[…] Read more

RBI MEASURES FAIL TO CHEER , RUPEE HITS ALL TIME LOW

Today rupee slumped to lowest level Rs 57.92 after RBI announced measures but it manages to recover some ground and closed at Rs 57.01.

At Forex market, there was expectation that government measures will arrest rupee’s down slide, which has fallen over 26 percent in last one year.

Today Moody’s today retained country’s credit rating to STABLE in comparison to earlier NEGATIVE rating.

RBI announced a hike in FII ( Foreign institutional investors) limit in government bonds to USD 20 billion, while allowing up to USD 10 billion from overseas borrowings by India Inc for financing new projects and refinancing […] Read more

CONSEQUENCES OF RUPEE DEGRADATION

1. INVESTMENTS: Profits of companies with high foreign currency debt and imported inputs may fall, resulting loss to all stakeholders.

2. IMPORTED ITEMS: Fuel and other key imports become costlier and it will lead to high prices i.e. inflation.

3. FOREIGN TRAVEL: Travelling abroad may become expensive and it is bad news for tour operators or travel agencies.

4. EDUCATION ABROAD: Students will have to spend more on tuition and stay. This will increase loan burden.

These are the few consequences of rupee degradation according to common people.

Views and comments regarding more consequences are welcome.

[…] Read more

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