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Tuesday, August 1, 2017

What is Rupee-Dollar Equation?

The big prevalent satire is "Indian rupee only goes up one time and it is the time of toss"
Today, due to the falling prices of rupees, there has been a lot of attack! Bhartiya Mudra, that is, the rupee has fallen considerably against the dollar! But do you know what is the reason for which the value of rupee is affected and how you can contribute to strengthening the rupee in the countryside? Let us tell you all this mathematics. And that too in easy language!

There is a very straightforward theory. The less dollars that India has, the value of the dollar will increase! India or any country makes its own needs either by itself or importing it from abroad and you have to pay them in dollars to import anything from abroad! For example, if you want to import oil from any country, you can not pay it in rupees. For that you have to use any currency that is recognized internationally. So this means that India will have to pay in dollars or euro!

I wish that these countries accept the rupee and if we print the amount and give it to them, but unfortunately it is not really that.
Now the question arises: Where do we get dollars to make international shopping? Dollars or foreign currency in your country comes from different mediums!

1. Export: When we export foreign goods made in foreign countries, we receive foreign currency as payment to them!

2. Foreign investment - Foreign companies, when foreigners start their business in the country or if foreign investors invest in the industry or the stock market in our country, we still get foreign currency.

3. Living overseas: When the Indians send dollars earned abroad from abroad, our foreign exchange reserves still increase!

Now we have to keep the reserves of dollars for our expenses and the import of essential items. It is also known as "foreign exchange reserves". If for some reason the stock is exhausted then a big problem will arise before us, without our oil all our economy will be stuck!

A balance of our import bill and export bill is necessary. If this equilibrium is disturbed, then there is a shortage of foreign currency which is also called "Current Account Deficit"! India is going through the problem of current account deficit due to which our currency is constantly devalued. And resultantly, the price of rupees is continuously falling!

What can be done to strengthen the rupee?
1. Export should be increased so that the foreign currency is gained. Increase production so that more and more exports can be done.

2. Promote indigenous products: 80 paise drinks made in abroad, are sold here for 15 to 20 rupees! If we start indigenous items or use, then the cost of importing these foreign items will be saved.

3. Option of oil- We are compelled to import large amounts of oil as the production of oil in the country is not in accordance with demand. If we try to change our dependence on oil, then we can save a huge chunk of foreign reserves and for this we should consider oil options.

4. Indian’s love for gold - Attachment to gold is quite common among Indians. There is an indefinite increase in demand for gold on wedding or festival festivals, which increases our import bill!

To strengthen roughly rupees, you have to increase investment from foreign countries. To create a favorable environment for foreign investors! Apart from this, indigenous adoption has to be done. The things that we can make in the country have to stop imports! Every Indian will have to contribute to the development of India with integrity. The more the production will increase, the more the exports will be, the stronger our economy will be!

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