Lip service is a currency!

What if the dollar were no longer the reserve currency? 

Mr S L Rao has his own unbalanced understanding of dominate currency even with other issues. One reason seems to me that it is invariable among Indian economists expects some like B R Shenoy.

How China manages their Currency Appreciation and industrial growth?

Why Governments and industries in India wolf cry for rupee depreciation? Instead it should aim for rupee appreciation.

In fact rupee depreciation benefits few people (papaus, exporting industries, people living outside India etc) but if it appreciates the masses get benefits from importing goods and services.

Mr V. Anantha Nageswaran writes in Mint “In 2008, India’s nominal trade-weighted exchange rate has depreciated by more than 12% whereas that of the Chinese currency has appreciated by nearly 10% (source: Bank for International Settlements). Whether by choice or default, the Chinese currency is headed in the right direction whereas the Indian rupee is headed in the wrong direction”.

Interestingly he says that “there is little to be gained by keeping the rupee weak. In any case, the sensitivity of India’s exports to the rupee exchange rate is smaller than that of its imports to domestic growth. Further, India’s exports contribute little to GDP compared with domestic demand factors”.

Need clinics to cure currency illness by Chandra

Here is an article says that the “US took way back in 1944 hot on the heels of World War II when together with its staunchest ally, the UK, it established the Bretton Wood twins and urged the world to adopt its currency as the international referen ce currency in exchange for an ounce of gold for every $35 surrendered” further “US dollars — domestic and offshore. At a rough estimate, one reckons that the quantum of the US dollar in circulation in the offshore market at any given point of time can easily rival that in circulation in the domestic market”.

In fact it is true that “China by deliberately following the policy of keeping its currency devalued with a view to facilitating its export-led growth and the US through its policy of offering its currency as the international reference currency”.

 But somehow the world also enjoyed cheaper goods from China!

1 dollar= 20 Rupee or even less by Chandra

Why socialist (Economics) professors don’t teach a simple fact about weak rupee and strong rupee?

Why Indian Commerce Minister doesn’t preach rupee appreciation?

Who will gain from rupee appreciation and who will not?

No jargon nothing. There are many way by which one can look into the simple economics of rupee appreciation and depreciation.

If the Indian rupee get stronger or otherwise appreciates against say US dollar it is good for every poor people in India, so that they get cheaper imported goods with high quality. In the case of good quality products which is not available within India is doubly welcome.

Of course the domestic industries will get affect and may lead to more employment losses. It doesn’t mean that the poor people should sacrifice their natural right to access the cheaper goods from other country.

If the rupee appreciates by which the particular industry faces greater challenges should be read for the alternative arrangement without taxing the poor people little choice.

No doubt the Government officials, ministers may wolf cry for foreign exchange reserve, this and that by lobbing. But they will never serve for poor people after they voted into power. 

April 11 2008 is the day I felt amazing and more excited to purchase more stuffs usually liberal economists books but could not make use of that. That day the Indian rupee was at 39.98 for per US dollar.

The above story led me from the today’s news which I read in the Business Line “Rupee crashes by 90 paise”, in which Mr Kamal Nath, who is India’s Commerce Minister lauds stupidly “We have allowed rupee to move from 39 to 46 against the dollar. We should not calibrate. Not calibrating it shows the strength of our institutional systems and that the best practices have been adhered to in Asia”.

Is the right way to ‘strengthen our institutional system?’ or is the babus way of stealing poor people choices?

There is strong case from my side. For instance, the persons like me could not buy the book which has been published way back several decades. See the below list: 

Book Name	Price
	In Indian rupee	In US$
Economic Facts & Fallacies  by Thomas Sowell (Hardcover - 2008)	913	17.16
A Man of Letters by Thomas Sowell	1251	19.77
Basic Economics 3rd Ed: A Common Sense Guide to the Economy by Thomas Sowell(Hardcover - April 2, 2007)	1238	26.37
Applied Economics: Thinking Beyond Stage One by Thomas Sowell (Hardcover - Nov 11, 2003)	930	19.80
Hayek Collection	5166	110
Hayek on Hayek	1503	32
Individualism and Economic Order	986	21
Boehm-Bawerk Collection	5213	111

The millions of poor people and even non poor in India have hundred of things in list like mine (still goes long). Therefore there is no harm in the rupee appreciation (against US dollar) which is actually good for people. More the imports of quality goods attribute to more the rich people and innovate domestically more than they import further.

In other words Mr Kamal Nath is indeed producing more poverty or depraving poor people’s choice which is not permitted in the constitution. “No person shall not be deprived any of his or her basic choices which are essential for the life and that never be a sufficient condition.

There is other interesting post on this issue by Indian liberal economist Sauvik Chakraverti