According to the annual report of RBI for the year ended March 2012, it is suggested that the pass-through of the depreciation of the rupee exchange rate by about 11 percent in the four months of 2013-14 is incomplete and will put upward pressure as it continues to feed through to domestic prices
Measuress taken by Raghuram Rajan for reversing the Rupee depreciation and more:
1. Special windows for banks
a. For NRI deposits taht mature in 3 years or more capped at 3.5%
b. For swapping $ borrowings at a rate 1% less than the ongoing rate
c. Doubled Banks overseas borrowing limit
Banks
will swap their dollar funds—flowing through both the NRI deposits and
overseas borrowings—with RBI with rupees, and when they are required to
repay their depositors and lenders, they will get their dollars back
from RBI. The cost of converting the dollar fund into rupee at market
rate would have been much higher. In other words, RBI is subsidizing
their cost of funds.
This is expected at reducing Current Account Gap.
Oil Companies need not go to banks for their $ requirement for importing.
3. General guideleines for Banking Sector
bank branch expansion made a normal business decision for banks meeting certain standards
A depreciating rupee is good for exporters. Indian products will become competitive globally.
Indian companies also feel there is some kind of slowing down
But what is in it for an average investor?
Hold on to your SIPs, even if that monthly sacrifices hurts you. Reduce expenses as far sa possible...reduce the number of outings, taking food at high priced restaurants and hotels,...yes fasten your seat belts..united we stand, divided we fall...could be a message for those contemplating a divorce!
Yougsters, take thhat job, even if it is not your dream job..first you have to stand on your two legs and be able to plan up to your dreams
During the WW years, it was competitive devluations that finally gave birth to IMF and World Bank. Now what we see today is a similar situation imposed on India by the competitive fiscal measures of major economies.
Financial descipline by individuals can maintain social harmoney by the time Govt is capable to deal with external situations.
happy investing
