Dollar flying or Rupee falling (Explained) If someone has basic knowledge of economics, will know answer of this question but in India, standard of journalist n leaders is so low that they even don't know such basics This thread will answer - dollar flying or rupee falling 1/18
There r around 200 countries in the world n each have their respective currency n all currencies maintain exchange rate with currency of other countries exchange rate of currency depends upon supply and demand of that currency
Now the question dollar is strengthening or rupee is weakening Check USD INR performance of last 1 year Oct 2021 : 1 USD = Rs 75 Oct 2022 :1 USD = Rs 82 Its due to good performance of USD or due to bad performance of INR ? We can't say on the basis of that curve
To check this, we have to find - 1 How Rupee is performing against another major currencies of the world 2. How other currencies r performing against USD If rupee is falling against other currencies also then we can say rupee is falling
If other currencies also falling against USD then we can say its dollar is strengthening British Pound, Euro and Japanese Yen r the other major currencies of the world. Lets check Rupee vs Pound Oct 2021 - 1 GBP = Rs 104 Oct 2022 - 1 GBP = Rs 92
So in 1 Last Year Rs strengthened against GBP Lets check Rs vs Euro Oct 2021: 1 Euro = Rs 88 Oct 2022: 1 Euro = Rs 82 So Rs strengthened against Euro also
Lets check Rs vs Yen Oct 2021 : 1 Yen = 0.65 Rs Oct 2022 : 1 Yen = 0.55 Rs So Rs strengthened against Yen also In last 1 year Rs weakened against dollar but strengthened against all major currencies. It gives indication that Rs is not falling Lets check performance of these
currencies against dollar For that we will check dollar index dollar index measures relative performance of dollar against 6 major currencies of world including GBP, Euro n Yen Oct 2021: USD value agst 6 major currency = 93 Oct 2021: USD value agst 6 major currency = 112
So it proves that rupee is not falling, its actually dollar is strengthening. Rupee is fighting bravely against dollar and performing very well compares to other currencies n India really deserve appreciation of it. Reason for this Petrol import covers 30-40% of our total import
In last 1 year, due to Russia Ukraine war, prices of oil and gas is sky rocket. India import bill is getting higher Oil is traded in USD Import high, export less means demand of USD high, demand of INR less So despite of such negative condition, INR fighting bravely
n performing well agst other currencies. Now let me tell the reason why Dollar is sky rocket. Reason is US federal reserve rate that was 0 in Feb 2022 and now its 3.5% Now understand this American banks need to maintain a fix amount to US fed bank n for that on daily basis
they keep taking loan from another bank n intrest rate on that loan is called fed interest rate. When fed increase that interest rate then all investors of the world, take out money from their current investment n invest into US fed bank coz investment in Fed bank is considered
safest investment in difficult situation. U can invest in fed bank only in USD so u need USD for it so demand of USD increase n prices of USD goes high n exactly this happened in last 6 months Why fed increased interest rate ? To control the inflation As interest goes high
Interest rate of saving account, FD also increase, credit card, home loan interest goes high people stop spending n start investing, circulation of money goes down in market, demand goes down n price comes down Basic economics So to control inflation US increased fed rates
due to that USD demand increased n USD strengthened agst all currencies So final conclusion its USD is strengthening, Rupee is not weakening but I will tell u one case when actually Rupee weakened n that happened in during 2008-14 check the fed rates of last 40 years
Fed rates were 0 during 2010-14 Now check the dollar index of last 40 years 2001-03 amd 2022 was the time time when dollar was very strong 2008-14 was the time when dollar was weak against all those 6 currencies
Now check performance of Rs and USD during 2008 -2014 2008 : 1 USD = Rs 40 2014 : 1 USD = Rs 63 Even when dollar was weak globally, Fed rates were 0, INR kept falling and fell around 50% That's called Rupee was falling
So now u have all data U know basic economics Irony of this country is that standard and intent of our Opposition leaders and journalist is so low that they don't miss any opportunity to defame their own country. If any question, pl ask in comments End of thread 18/18
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