Rupee may surge to 40 per dollar if Modi becomes PM- Report in times of India

I am not able to believe that how rupee shall appreaciate by 35% if Modi becomes PM. This report is published in Times of Indai. India is a net importer means our import is more than exports. Recently gap between import and exports has reduced due to ban/ imposition of duties on Gold. But demand for petrolium product is on rise due to demand of private vehicle and industrylization. We are still exporting garments/food items who price are relatively low. Share of Industrial products need to be increased to sustain a stronger Rupee. The main reason for steep depreciation of Rupee was financing of import from short terms funds which were are invested by FII in debt/ Govt. securities. Once they withdrew hot/ easy money from market rupee tumbled from 52-53 to 68 in less than three months. Import cost of petrol and other items increased by 25% in rupee term. But exporter should have been happy but it is not correct. Foreign buyers adjust price of goods based on value of dollar. On the one hand we paid more INR for imports s and foreigner ( importers from India) gets the benefit of depreciaiton of INR.

Depreciation/ appreciation of Rupee has a huge impact on indian economy and its citizen.If rupee appreciates further say upto ( 50-55) than fuel price will come down by 10%. Indian companies will pay less for imports which in turn reduce the price or their prfitablity shall increase . Profitabilty will attract investment which will create job.
I am not sure how Modi will help in appreciation of Rupee but my wishfuly thinking is that Rupee must appreciate. After all a strong currency is a pride of Nation. Jai Hind more  

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it is wrong prediction that if rupee appericiate our export will come down our cost of production also come down so export will boost up import is more due to corruption in army railways oil imports government is not allowing ethnol mixing we have increase our production to crub imports coal production iron ore production and capital goods production more  
Dear Manish, Reality is otherway around. When dollar appreciated then importer reduce our price for merchandise. You check with Garment exporters. Suppose you fix a price of $3 per item exchange rate is 50 so expoerter shall get 150. if exchange rate is 60 , buyer shall approach exporter and re negotiate the rate may be $2.75 or $2.80 . India importer do not have this bargaining power as do not export anyhting which is exported by us only. Importer can switch any time to other seller either from India or any other country. If you are exporting medicine or enigneering goods, buyer can not switch to other seller.

Even if your argument is correct, our import is much more than export and demand is increasing irresective of state of economy whereas our export is dependable on world economy. if Global economy is doing well ,exporter is doing well. But our import which primarily petrolium product demand for which is growing. Appreciation of rupee is most welcome and focus should be to move from export of agro procuct to engineering goods etc. There are plenty of example wherein crash of currency has bankrupt the country. more  
Hello Ashish,

Due to poor policies of the present government and the famous "policy paralysis", the government has neglected the basics and concentrated on measures which were frivolous in nature like hiking taxes, surcharges, retrospective tax on Vodafone etc.
RBI has been repeatedly asking the govt to pull up its socks but govt was busy in its own scams and dirty politics.

All said and done, why these people are banking on Modi is due to his flair for pin pointing the root cause and addressing the basics like education, infrastructure and trade friendly policies. politics and 2002 apart, one has to admit that common man in Gujrat is a happier lot then rest of India.

Next reason is that Dollar is already artificially high. PM and FM have been giving lame excuses about this being a global phenomenon. If it was so, then why only Indian Rupee gets weaker compared to Dollar, Australian Dollar, GBP, Euro, .....? The main reason is blatant corruption and black money. once the black money is reigned in, Rupee may go even stronger than what is being predicted.

Another proposal which is very interesting is the imposition of only transaction Tax and removal of all other taxes. It shall curb balck money and make things affordable for the poor. if tried and successful, one can't predict how strong rupee may become, maybe even higher than Rs 25 per Dollar!! Some may call it Utopian dream but I have analysed it and find it very practical and worth a try. more  
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