My opinion is what is being done by RBI is *nowhere* near enough..that is just my opinion. Please take a look at USDINR=X at finance ***** for three months. I understand the point on exports, but debasing the currency for exporting to a bankrupt economy like US may back fire.
All I am saying is this not good for the poor people or middle class.
It might work for traders like you.
The RBI has raised rates by 200 basis points - this means you pay more interest for every Re you borrow. It has also hiked the CRR - which means banks have to deposit more with the RBI & have less to lend. Both these measures make the INR more precious, not 'debase' it.
Does raising int rates benefit the common man? A basic aspiration for an 'aam admi' is to own a home Today he has to pay a lot more towards home loan installments than he had to 2 yrs back (on the same principle). Imports have benefited, but then i wonder what % of the common people benefit from imported goods & services (& if it's at the expense of domestic goods & services then more people are likely to be affected than the handful that benefit).
Forget IT, some of our most labour intensive sectors like textiles, gems & jeweleries, leather goods, auto ancillaries even farm products are dependent on exports for a large chunk of their revenues. Can you imagine the job loss in these sectors if exports were to go down the drain?
The $ has come down against all currencies, not just the INR. China has been artificially propping the Yuan (& this has been a bone of contention at the WTO) or else the Yuan-$ exchange rate would have been much higher than the INR-$.
Ideally all currencies should be allowed to appreciate/depreciate freely, without fiscal/monetary intervention (I don't know if this part of the WTO agenda but should be). This would mean that no country would be able to garner any unfair advantage in the global trading arena & the quantum of exports would be solely the function of availability, competency & efficiency. But this is hardly the case in the real world.
Regards,
Kalyan.
. In any case some industries have to suffer.
