At the interbank foreign exchange, the rate for Indian rupees increases to 82.73, registering a gain of 8 paise.
(Image Source: The Print)
Interbank Foreign Exchange: On Monday, the domestic unit opened around ₹82.74 against the dollar and gained a rise of 7 paise. 8 paise increased over the previous call registering a ground to ₹82.73 in early trade on Tuesday.
Indian Rupees vs Dollars: Taking a beat
The Indian Rupees have devalued by ₹9 per dollar since the very beginning of 2022, taking a beat down with a head start of ₹74 to almost ending at ₹82.73. Whereas myriad studies show that devaluing of Rupee should be a piece of better news for the country and its exports, this couldn’t be farthest from the truth proven by trade data and testimonies of industry Players.
Various sources’ analysis and reports of 126 months’ worth of trade and foreign exchange data from April to September 2022 suggest that the exchange rate has an almost negligible effect on India’s economy or Performance.
But as the rate devalues, dollars eventually get the upper hand as they could buy more goods and better services for lower prices from India. In Simpler words, the import does have a heavy effect on devalued Rupees as once devalued, India becomes cheaper for abroad customers, who usually pay in dollars. But things are not as simple as they seem – it seems.
Ajay Sahai, Director General, and CEO of the Federation of Indian Exports Organisation (FIEO), an exported body recognized by the Government of India, asseverates that there are many a range of factors including – currency which isn’t a strong one, that needs to be considered before making any remarks on the matter.
Ajay Sahai later added that “India’s exports are generally directly proportional with global trends in trade. When the global trends grow up so does India’s export and when it goes down so does export. Another factor is inflation which has effects on the export sector. Currency value does play a role in export and trade but not nearly enough to play a drastic shift in export.”
Sahai also explained, “A devalued Rupees also mean that importers need to spend more Rupees to buy the same product, whereas exporters who must import goods and services, the increased causes nullified gains from a devalued currency. As the various currencies of the world are devalued, so the competitive advantage of a devalued currency is also ruled out.”
SK Saraf, Chairman of Technocraft Industries Limited, a company exporting industrial goods from India said that there is “hardly any relation” between exports and a devalued currency.
He also added that “even if the devalued amount is up to 10% even then the only gains to exporters are barely 0.1% to 0.3-4% that too depending on a range of factors. Also, the potential of gaining from the devalued currency is lost on inflation. As they customers also demand discounts. Hence the exporters generally never gain much or anything at all from a devalued currency.”
Early Trade: Dollar takes The Reign
On Monday, the rupee settled paise lower at 82.71 and the domestic unit opened around ₹82.74 against the dollar and gained a rise of 7 paise. 8 paise increased over the previous call registering a ground to ₹82.73 in early trade on Tuesday.
On Tuesday, according to Sriram Iyer, Senior Research Securities, Asian and emerging market peers set a cautious tone among global investors Ahead of Federal Reserve Board (FED) Meeting (It supervises and regulates financial institutions and various economic activities throughout the day – processes millions of transactions each day).
Sriram Iyer also added any sharp devalues in the rupee could lead to the stepping in of the Reserve Bank of India (RBI). Meanwhile, the dollar index, which computes, the greenback’s strength against a basket of six currencies, consisting of the Euro, Pound, Yen, Canadian dollar, Swiss Franc, etc, fell by 0.19% to 111.31.
Foreign Institutional investors (FIIs) bought shares worth of ₹4,178.61 Crores according to the exchange data on Monday. In the domestic Equity market, the BSE- Sensex traded 309.52 or 0.51% higher at 61,056.11. Whereas NSE Nifty rose by 102.40 or 0.57% to 18,114.60.
(With inputs from Multiple Media Outlets)
Read More at: – Poor-financials-and-declining-share-prices
