 |
| Money2India |
Value of Indian rupee has been
undergoing frequent devaluations. Yesterday, it hit the mark of 56, a record
low against the US currency. A series of devaluation within a quicker time span
has left the economy more unsettling. A heavily negative impact on the domestic
front is inevitable. Devaluation will further add fuel to fuming inflation. Continuous
price hike is already suffocating for the poor and middle class and it will continue
to do so but in greater measure. India is
import intensive and currency devaluation will inflict greater effect on trade
balance.
Being an open economy, India has
been engaged in international trade for a long period of time. Decline in the
exchange rate against dollars means suffering the same fate against the
currencies of developed nations. When rupee is devalued, trade balance is hit
worse. In Indian context, the exchange rate declining will take India towards
adoption of a different approach commonly referred to as ‘Asian growth model’. India should follow the trade strategy of
China and South Korea. These countries have high savings and investment rate. Furthermore,
low exchange rate has helped these countries to boost up their export figure.
For the common people, exchange
rate decline has another implication. Those who need to send Money2India from the USA, now have to
transfer less money because dollar has gone up in value as compared to rupee. This
will lead to more saving for the NRIs. On the opposite end, the scenario is
quite disturbing. It is because the Indians need to transfer more money to America,
thereby being almost forced to bear the brunt of constant rupee devaluation.
No comments:
Post a Comment