How Indian Rupee Value can be increased against US Dollars?
There are many factors affecting Indian Rupee while comparing with $/£. Before going into the concept, let us read something about the history of Indian Rupee. Before 69 years, one INR is equal to 1 USD. In 1990, one Indian Rupee is Equal to $0.06 USD. At present (2016), one Indian Rupee is equal to $0.01469 USD. India is labeled as developing country but do you ever notice our currency rate. Indian rupee value has drastically fall from 1 to 0.01469 against USD in 69 years.
Technically there is no development. This is because, India was like a huge market to developed countries. They invest and take profit. As stated in a Tamil Movie “Shivaji” “Rich become richer and poor become poorer” due to this only. India needs to adopt a newer version of swadeshi movement to tackle this.
There are 2 vital things India needs to concentrate immediately to make our Rupee Strong.
- Maintaining good dollar reserve and
- controlling domestic consumption.
Why Dollar reserves are important? Maintaining good Dollar reserve is a defensive way to tackle the rupee depreciation. In general, more we import goods and services, more the currency rate will fall. India is a major importer of Gold, Crude oil and we’re bound to use USD to purchase it from other countries. As a result our dollar reserves declines at faster rate. If we are in shortage of USD then we have to do currency devaluation to stabilize the reserves. Currently, the BJP government had took a bold attempt by proposing Currency Swap agreement with some countries to trade in INR. These currency swap agreement will help us to save our nation’s dollar reserve.
For an example, Let us consider India is getting Crude oil from Iran. Iran accepts only Iranian Rial. So India has to remit the equal value of Iranian Rial in US dollars to Iran. This is because US dollar is universally accepted currency for cross border trade. So having sufficient USD is essential. If currency swap between Iran and India is established then India can use INR to pay Iran. Hence the need of USD is eliminated and also we could eliminate the risks and charges required for multiple currency exchange.
Secondly, both congress government and BJP government are very keen in bringing FDI and easing the process of foreign firm to establish its presence in India. If a foreign firm wants to establish its operations in India then it has only two options.
- It should get loans from Indian banks
- It should convert dollars into INR.
If any foreign companies decides to get loan in any of the Indian Banks then our nation get benefited by the Interest in lending the money. Usually bank charge 12% as Interest. Else, if the company do dollar exchange then it adds benefit to our dollar reserve. This method may be suitable for a short term and we should not forget that we are again allowing foreign companies to gain more from Indian economy.
Thirdly, if RBI attracts NRI investment then it could recharge the dollar reserve. In nutshell, importing Gold, interest rates,and dollar reserves are indirectly accountable for rise or fall of Indian rupee rate and as of now we cannot bring notable progress and it is up to the RBI/government.
As I mentioned earlier, more we import goods and services, more the Indian rupee value will fall. So Domestic consumption plays a major role in affecting Rupee rate. Boycotting foreign goods and services is the only way to make our rupee strong. I know it is quite difficult. As of now boycotting goods is little easier while comparing boycotting foreign services. Majority of service sector is owned by foreign companies only. From Search engines to digital money we are dependent on foreign companies.
By keeping our nation’s Interest we have to strictly follow Modern Swadeshi Movement 2016. Try to boycott using foreign goods and services as much as possible. Please note that this movement is not against our government or its policies. Everyone knows well that we cannot boycott foreign good 100%. This movement can be categorized as one’s self interest to boost national economy by using goods made in India. I have made a small guide called Guide to Modern Swadeshi Movement 2016 which has some information of major foreign companies and its brands in India and how to choose Indian products as its alternatives. Click here to download the guide for free.
Jai hind. Share this post and support Modern Swadeshi Movement 2016. Thanks for reading. Have any ideas to improve Indian Rupee value? please comment.
Kind request to Indian Companies/Readers
Support developing this guide. I might miss to add many Indian companies in the Modern Swadeshi guide. Please let me know about your company details and brands to email@example.com so that I can update the same in the guide. Thanks in advance
Also, Read How Akshaya Tritiya Affects rupee rate