Why RBI not shoring up the rupee?

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6pack

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price today - 68.89. Are they trying to please exporters and jack up the rupee to 70+ so that the US sanctions don't have an effect on exports?

Normally, when the rupee slides, RBI sells US dollar to increase or stabilize the price of rupee. They don't seem to be doing anything since the rupee has fallen from 65 to 69 in just 6 months. So something wrong with the RBI thinking process i think. Anyone wondering what is going on here? Is it Make India Great Again (MIGA) plan ?

https://www.x-rates.com/graph/?from=USD&to=INR&amount=1
usd-rupee.png


Lower purchasing power = higher cost of oil imports = higher power prices, petrol prices, diesel prices, food prices = higher inflation = more poor people.

And then funny thing is some news papers are running stories that India's poor decreased.

Weird that no news outlet is talking of this deprecating money. What will we see in next 5 years if Modi gets elected again? 100 rupees to dollar?
 
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All true but we don't know how long this artificial spike in oil prices will last. Artificial becaue of geopolitical uncertainty. Demand hasn't recovered yet so higher exchange to keep exports going

The other factor is FII pulling money out because there are better returns states side if the fed increases interest rates. That also drives up the exchange rate.

The higher oil price is due to Iran sanctions. I've been following that topic since 2011 and was happy when the deal was struck. That deal now is almost dead so nobody knows how things will go

At the same time the deadline to cut imports from Iran is Nov 4. The govt is resisting which is short for haggling. Right now the Americans seem firm but if alternatives are provided we will comply otherwise things become more uncertain

banks raise interest rates, there is an inflation bubble to be managed
 
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I believe 70INR/USD will be new normal by the year end.
And by the end of Modi's next term, it will be above 100INR/USD.
 
blr_p said:
All true but we don't know how long this artificial spike in oil prices will last. Artificial becaue of geopolitical uncertainty. Demand hasn't recovered yet so higher exchange to keep exports going

The other factor is FII pulling money out because there are better returns states side if the fed increases interest rates. That also drives up the exchange rate.

The higher oil price is due to Iran sanctions. I've been following that topic since 2011 and was happy when the deal was struck. That deal now is almost dead so nobody knows how things will go

At the same time the deadline to cut imports from Iran is Nov 4. The govt is resisting which is short for haggling. Right now the Americans seem firm but if alternatives are provided we will comply otherwise things become more uncertain

banks raise interest rates, there is an inflation bubble to be managed
Click to expand...

FII's pulled out a lot after looking at India's bad tax systems. Plus IT dept running after Vodafone etc did not help the cause. Even the gst played an effect on this since all investments get taxed double now.

Higher price cannot be blamed on oil alone. The whole world knows that India's RBI / govt is a currency manipulator from since Manmohan's time in the 80's. He pulled the currency down to make it attractive for foreign investments here. Then when that did not work, he did it to make it look like exports went up and subsequent FM's went along with it. India produces bad quality stuff year after year and besides software exports (or IT) and iron or coal we don't have anything much to export anywhere of value. Who will invest in a govt who's bond does not hold value? So these failed FM's are resorting to pulling down the value of rupee as short cut method instead of doing something better like investing in R&D infrastructure, cheap power etc
 
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I'm getting an error when I try to load that page.

How much of that increase is due to depression of the rupees? 2016-17, it must have fallen from 63-65 or such. 28 billion difference is not much to talk about for a developing country with 7% growth rate or what they govt was Tom toming about.
 
6pack said:
I'm getting an error when I try to load that page.

How much of that increase is due to depression of the rupees? 2016-17, it must have fallen from 63-65 or such. 28 billion difference is not much to talk about for a developing country with 7% growth rate or what they govt was Tom toming about.
Click to expand...

Some IT cell member must have reported to the ministry that their data is being discussed in public.
 
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6pack said:
I'm getting an error when I try to load that page.

How much of that increase is due to depression of the rupees? 2016-17, it must have fallen from 63-65 or such. 28 billion difference is not much to talk about for a developing country with 7% growth rate or what they govt was Tom toming about.
Click to expand...
Yes now its showing an error. I wanted to show total value of exports since you said we do not export much

Start here
http://commerce-app.gov.in/eidb/default.asp

Select "Chapter-wise all commodities"

Then select year 2107-18, select USD, hit submit. scroll to the bottom, you will see our total exports for 2017 & 2016
 
https://www.firstpost.com/business/...ed-local-businesses-hurt-exports-4634991.html

Exports of merchandise – from industrial to agricultural goods – to African countries, Latin America and Japan dropped over the four years of Prime Minister Narendra Modi’s government and grew at single digits to other regions, according to an IndiaSpend analysis of government data.

In contrast, over 10 years of the two United Progressive Alliance (UPA-1 and UPA-2) administrations, India's merchandise exports – services exports are excluded from this analysis because they are limited to certain geographies because of trade agreements – grew between 11 percent to 33 percent, the data shows.
Click to expand...
 
6pack said:
Are they trying to please exporters and jack up the rupee to 70+ so that the US sanctions don't have an effect on exports?
Click to expand...
Definitely not. It is all because of the notion across investors who are bearish about the Indian Economy due to recent developments
One such example from this March Foreign investors stay bearish on India, pull out Rs 6,000 crore in just 6 trading days

FPI (foreign portfolio investors) outflows from Indian markets are a result of growing demand for the US dollar, coming from the expectation of an increase in the Federal rate. FPI may also be pulling funds from India to invest in other growing economies
Click to expand...
Later, a global sell-off was triggered after fears of creeping inflation and higher borrowing costs compounded volatility in financial markets across the globe. That is when FPIs started pulling out money from the Indian equity markets. "However, this was not a surprising scenario. Usually, amid global sell-offs, there tends to be a risk aversion among FIIs. In such a situation, they tend to pull out money from emerging markets like India, which are considered to be riskier than developed markets and more susceptible to global risks
Click to expand...
 
Foreign direct investment in India hits 5-year low in 2017-18

Foreign direct investment (FDI) in India seems to be petering out with the inflows growth rate recording a five-year low of 3% at $44.85 billion in 2017-18.
According to the latest data of the Department of Industrial Policy and Promotion (DIPP), FDI in 2017-18 grew by only 3% to $44.85 billion.
Foreign inflows in the country grew by 8.67% in 2016-17, 29% in 2015-16, 27% in 2014-15, and 8% in 2013-14.
However, FDI inflows recorded a negative growth of 38% in 2012-13. According to experts, it is critical to revive domestic investments and further ease of doing business in the country to attract foreign investors.
Anil Talreja, Partner, Deloitte India, said the low growth of FDI in the consumer and retail sectors can be mainly attributed to uncertainty and complexity of the FDI policy.
“While the government has taken substantial efforts in relaxing the regulations as well as removing ambiguities, global consumer and retail companies are still hesitant to take decisions to invest in India,” he said.

https://www.hindustantimes.com/busi...-in-2017-18/story-g4UcXb3Sw10pxNWimHJkkN.html
 
^^this is another factor that affects the exchange rate. A tightening of US monetary policy sucks money out of emerging markets. Thing is its hard to put a finger on what specific policy does it. In 2013 it was the 10yr bond yield that resulted in the big drop in rupee to dollar conversion

 
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