Finance and Investments
How to increase Indian Currency Value?
Date: 20 Nov 2012 Posted By:
Hafeezur Rahman P
Finance and Investments
As we are aware, our currency value goes down ever, what step shall Government and Citizen to be implemented in order to increase Indian Currency Value? How to increase Indian currency value that helps entire Citizen and our country?
Expert can tell their opinion on increasing currency value, and at the same time let us know how to stop decreasing currency value?
Want to know how to stop devaluation of the Indian currency? Learn how Indian money can be strengthened, and what can citizens do to increase Indian money value.
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22 Nov 2012 Member Level:
Points : 5 (
To increase the rupee value or Indian currency value, Indian government needs to adopt the following measures:
-Increase our export trades by producing higher quantities of Indian goods that are in demand abroad.
We also need to start manufacturing or producing new stuff that is in demand abroad.
-Indian citizens should themselves feel responsible and try to purchase only Indian goods. Wherever possible, we should avoid buying stuff from abroad.
-We should encourage more FIIs to invest in Indian Stock Market.
-We should improve inflow of foreign currency in India by improving the tourist spots and maintaining them properly to attract foreign tourists. We should promote Indian tourism on a global level as much as possible. We can make use of the Indians who are settled in different countries of the world. India has some of the most beautiful places in the world and it is important to maintain their sanctity.
-We should bring back all the black money of corrupt politicians and businessmen from Swiss bank accounts. This money should be utilized for the betterment of our own people as well as for innovation.
GANESH G BHAT
22 Nov 2012 Member Level:
Points : 3 (
Currency rate of any country depends basically on demand and supply. Speculation, investments or economic activity also contribute to it.
A country's currency does not always reflect its economic condition. Though a country with very strong economy have a weak currency relative to other currencies and vice versa. Currency trade mostly on technical factors than its fundamentals. If a currency's value become too weak or too strong compared to economic conditions, as a result of free market trading, the government tries to artificially normalize the demand and supply.
Raising Interest rates in case of weakening currency. This may work out or not because high interest rate weakens the economy which may further weaken the currency.
A strengthening currency can be normalized by flooding the market with more currency. This is done by decreasing interest rates. This leads to inflation which makes a fall in currency value. Currency value depends on multiple factors.
Factors affecting currency movement:
1. Import of goods and services require conversion of local currency in to foreign currency where the goods and services are imported for payment.
2. Government actions.
3. Speculation in the foreign exchange market which includes the inflation rate, economic activity or the currency's trading activity.
Tulika Devi Nath
23 Nov 2012 Member Level:
Points : 10 (
First of all you should understand that the value of currency going down (against other currencies) doesn't always reflect a weak economy. Similarly, an always appreciating currency doesn't indicate a healthy economy. Both has their own advantages and disadvantages. The factor which is bad for a country's currency is huge fluctuation of its value in the international markets. Fluctuations reflect instability of the economy and other countries lose confidence in an ever fluctuating economy.
There are many factors which are responsible for the value of the currency. Among them the key factors are inflow of foreign investments (demand for domestic currency), balance of trade (net of imports and exports), foreign remittances (inflow of foreign currency), inflation, gross domestic product, monetary policy, global events etc.
Currency is a commodity. The basic principle which determines price of a commodity is demand and supply. Similarly, the value of a nation's currency is determined by the demand and supply of that particular currency in the international market. Thus the only mean of increasing the value of the currency is to generate more demand for that currency.
The central bank of each country closely monitor the value of the currency in the international market and intervenes as and when required to arrest any significant slide or steep appreciation. The advantages of an appreciating currency are as follows:
Imports getting cheaper:
Due o higher demand of the currency in the international markets, the exports will get dearer while imports will become cheaper. In case of a country is highly dependent on imports, it will help them in building raw material reserves.
The major disadvantages are as below:
Lower domestic output
:Due to higher prices in the market, the products of the country will become costlier. Lower demand will eventually pull down the demand of the products (if it is more elastic) resulting in lower output.
More incentives for export promotion: As exports become costlier, the factories need to add more incentives to make the products more attractive.
Eroding value of expatriated profits
:The value of earnings of companies operating outside the country will deplete as the value will be less in terms of domestic currency.
Measures taken by the central bank to increase value of currency:
Mopping up foreign currency (Dollar in case of Indian Rupee) from the currency market:
RBI buys dollar from the currency market in order to arrest depreciation.
Building conducive environment for foreign investments:
This is the most important factor for currency appreciation. Various government policies which determines foreign investments levels are responsible for making a favorable investment environment. Higher levels of foreign investments will make the currency appreciate.
There is very less common people can do to increase value of currency in short term. However, in longer term, higher remittances from foreign countries etc can help currency appreciations. On the other hand, avoidance of speculation of importers in the currency markets in anticipation of currency depreciation may help appreciation of the currency.
26 Nov 2012 Member Level:
Points : 5 (
In the beginning of the last century the printed currency was pegged to Gold Standard. Those counties who exported more were able to accumulate gold and saw their currency's value rise; and those countries with more imports saw their currency undergo the opposite.
Bretton Woods Agreement in the year 1944 favored USA. Dollar was pegged to gold at $35 to 1 oz of gold. This dollar-gold parity-fix induced capital account inflows to USA since US dollar-denominated assets provided a 'safe' haven. USA expanded economically without any fear of inflation. Dollar denominated exports grew everywhere. Economically dollar currency ruled the world.
Unfortunately India was under British rule in the last century and was a major importing nation all through the century. Our value of exports are comparatively very less than imports. In the early period of our independence years, we were even importing food cereals. We export low value items. We import most of high- tech, high value items like communication equipments and aero-engines. Our current account deficit is burgeoning every day. This situation puts pressure on Indian rupee. Now our services sector is lending a helping hand. Thanks to our Software consultancy services exports.
Presently currency valuations mainly depends upon goods and services exported/imported between counties i,e trade between countries. The more you are able to export to a country, the more increase in value,your currency gets opposite to that currency. The opposite is that your currency gets low value against a country currency, if you import more from that country. India imports many tens of billions of dollars value of ICT equipment annually. India is putting very best of efforts to improve its exports.
The other major factors affecting currency valuations:
1. Political stability
2. Bank interest rates
3. Reserves of a country
4. Available Resources and manufacturing rates.
The following sustained activities can improve valuations of our Indian currency:
1. Indians have to improve their high technology equipment manufacturing to reduce most of the present imports burden.
2. Permit Foreign direct investments judiciously to improve capital inflows.
3. Improvement in Indian Entrepreneurship.
4. Allow healthy competition in trade.
5. Safe guard GDP growth
6. Value addition to our own raw materials.
7. Attaining self sufficiency in food production.
8. Improve R&D investments
9. Transparent pro-active & supportive Government policies.
10. Change in education system to prepare Scientific, Engineering and highly skilled work force.
India has got excellent natural resources and also needed human capital to take huge steps in international trade.They have to harness the imbalances prevailing in our economy.
Research from the Kaufmann Foundation in the US has repeatedly found that locally-owned industries have a strong effect on national stability. National stability ensures good image for a country and its currency.
26 Nov 2012 Member Level:
Points : 1
To increase Indian Currency Value, Government of India should
Produce large quantity of Indian goods, and export them to the right country, where their is shortage of that goods.
Improve R&D investment.
Bank interest rate
Stop black marketing.
26 Nov 2012 Member Level:
Points : 5 (
The currency of any country will be considered to be valuable when its demand for the said currency is higher than the supply and vice versa. All should understand that when the currency have more demand or less demand.
Factors to be considered for increase the value of respective home country currencies:
Demand of the currency: To increase the value of the currency one has to think that its demand should be increased on the same line.
The demand of the currency will only be increase when people try to buy products from their own country. We need to start buying Indian products, manufactured by India and the profits should be shared in India rather than other countries.
Ban on Import Items
We need to stop importing items from other countries, as importing from other countries lead to more taxes to be borne, more customs, and price of the same will be double or triple than the actual price. At the moment India depends on oil and other raw materials which are imported from other countries. India should not buy any low value items or products from other countries which has no added value to Indian Markets.
One of the major drawbacks for this issue is unemployment; people have to come forward to provide education to backward areas.
The remittances made by Non Resident Indian staying abroad, to India can be helpful in Indian growth. More deposit of cash in the account.
Export to other countries
India has to invent new things which are needed by other countries. India has to export them due to high market to their product in other countries.
09 Dec 2012 Member Level:
Points : 3
Answer to the question can not be short enough to be written in this column. A handful of books can be written on Indian Economy with special reference to foreign exchange and foreign trade. However in short the value of INR can be increased by :
TOP PRIORITY: Eliminate the existing black money though one time General Amnesty and Demonetization of Currency.For future strict enforceable laws be made so as keep the Indian Economy free of Black Money and Corruption. For Corruption we ,as citizens, all are responsible as we it is human tendency to seek favors
which is the root cause of corruption.
1) Eliminate Deficit Financing - the biggest source of inflation .
2) Exploit the Country's Natural resources including Manpower .Self dependence be the LOGO for every individual, every family, every Municipality, every Gram Panchayat ,every State and every Micro and Macro Unit of the society.
3) Government must launch Social Security Measures to discourage Savings and accumulation of wealth with the Individuals.
3) Export Services and end use products instead of raw materials. Raw Material be exported where our country is having abundance.
4) Dependence on foreign debt be reduced to bare minimum.
5) High Import bill on Petrol/Diesel/Defense products
be minimized by curbing expenditure on Petrol/Diesel and transfer/development of technical know how for defense products.
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