Dollar Sliding, Tension for INDIA ??

A

Hey guys, you all must be quite familiar that the dollar value is decreasing continuously and not it's about at Rs.40.30.. However this a had negative impact on some businesses in India. Here's what I have Read, Heard and Listened. kindly share your views on it.

1. TIMES OF INDIA (Dated 25/7/07 Pune Edition)

About 12,000 people lost their Jobs due to the Dollar slipping down to Rs. 40 From Rs. 44 in less than 4 months. All these people were in the industries which were related to Garments, Textiles, Diamond etc..

2. IT Companies profits down than expected due to to Dollar sliding down. (All must be aware of this)

3. IT Companies in India are going to cut their workforce in the the near future to sustain the loss. So this may be bad news for our IT friends.

Also salaries are not set to rise much this year for these people !!

4. [I AM NOT SURE ABOUT THIS]

Dollar my slip to Rs.36 by the end of this year having a too bad impact on Indian Companies which particularly run mostly on US Clients. If that happens, it might be a gr8 gr8 loss for India to then..

5. [A good news for some people]

Those who are in US for their studies will now need to pay less money as dollar slipped

...

P.S : If anyone here can explain me how the prices of Dollar, Rupees etc are decided and how they fall and rise, then that would be a great help to me.

I think I can explain this to some extent. Check out this article:
*www.foreignaffairs.org/20070701faessay86403/kenneth-f-scheve-matthew-j-slaughter/a-new-deal-for-globalization.html

I don't think its good or bad. Its inevitable. It will obviously affect the entire world, but I can see a balance of good and bad in the case of our Country, so its ok-ish to some extent. True, there will be massive losses for Indian buisnesses, but I feel that they will be able to recover well enough. The Indian economy is progressing rapidly; chances are the buisnesses that sustained losses will recover. (Feel free to contradict me >_< I'm clueless about buisness)

A

well can anyone else help me out to understand this.. ??

amol48 said:
2. IT Companies profits down than expected due to to Dollar sliding down. (All must be aware of this)

3. IT Companies in India are going to cut their workforce in the the near future to sustain the loss. So this may be bad news for our IT friends. Also salaries are not set to rise much this year for these people !!

IT companies take projects in thousand of dollars and then spend a little on its making by paying programmers peanuts.

My friend who works as a cost estimator in an Indian reputed IT firm says that the company doesnt even spend 1% of that on the programmers.

Now its time they consider reducing their profit margins instead of lay-offs.

A

Now its time they consider reducing their profit margins instead of lay-offs.

I guess they won't consider this option.. !! Instead they will think of lay-offs only. This will ensure that their profits are atleast constant though not increased

ok fine if they lay off who will do the work ??
now only not enough ppl for work !!!
else u mean to say work will also get reduced ???? may be this might be possible

Instead of lay-offs the other thing which they are already resorting to as reported by the media (saw it on TV) is not giving salary appraisals to employees.

A

lay off doesn mean that work can't be done.. It means the people who are hired now (Who actually don't deserve) would be said bye bye.... Also work may decrease too coz companies will ask for money now for each deal than before.. [I am not sure about this but]

Instead of lay-offs the other thing which they are already resorting to as reported by the media (saw it on TV) is not giving salary appraisals to employees.

@nerd
Yea i mentioned that here:

3. IT Companies in India are going to cut their workforce in the the near future to sustain the loss. So this may be bad news for our IT friends. Also salaries are not set to rise much this year for these people !!

amol48 said:
P.S : If anyone here can explain me how the prices of Dollar, Rupees etc are decided and how they fall and rise, then that would be a great help to me.

This happens due to value of GOLD! ..If stock of GOLD exists more/less in a country then it affects the value of DOLLAR/RS

rakeshishere said:
This happens due to value of GOLD! ..If stock of GOLD exists more/less in a country then it affects the value of DOLLAR/RS

Really? Can you explain further?

I haven't heard of that. I thought cold, hard currency and power is whats really important. Influence is the key. Besides, isn't oil worth more these days?

A

This happens due to value of GOLD! ..If stock of GOLD exists more/less in a country then it affects the value of DOLLAR/RS

@ Rakesh

Are you sure it depends only on gold.. ?? then it implies that Bahrain has highest amount of gold coz 1 Dinar = Rs.180 Rupees.. !! I don think it depends only on gold !! Must be some other thing

It is only and only for this reason that Value of Gold influences the currency value in countries..I will l8r try searching some links to substantiate my opinion

R

RBI maintains artificial rates of RS vs Dollors & if it did not regulate then the true value is around 35-36 only. It does so to sheild the export industry.

Now the bad thing is that to Americans, Indians quote the price in $$$ whereas they should ask for Rs, in that case the value increse / decrease will not effect them.

There use to be a time in India that earning in $$$$ was a fashion & a big achievement but now its reversing.
Be Indian & deal & quote prices in ur rupees.

A

RBI maintains artificial rates of RS vs Dollors & if it did not regulate then the true value is around 35-36 only. It does so to sheild the export industry.

Yea i have heard this..

It is only and only for this reason that Value of Gold influences the currency value in countries..I will l8r try searching some links to substantiate my opinion

yea please... I am not opposing you , what i want is just genuine info

I know this

. Read this year in Economics (Passed my 12th).
If you know a thing about the demand and supply curve, then this might be easy for you.
read here:*en.wikipedia.org/wiki/Supply_and_demand
or read last year's NCERT Macro economics

I dont remember exactly as I was not-so-kewl in economics.

Its like consider no. of Rupees per US$ (right now 40) on the YAxis. Then consider demand and supply of US$ on the Xaxis.
Then the point where the two curves viz. supply and demand meet, the rate of the US$ (i.e the currency on X axis is determined.)8)

And this might be a good news for people like me, I need a good upgrade for my rig. Dollar @ 36 will be toooo gooood.

A

And this might be a good news for people like me, I need a good upgrade for my rig. Dollar @ 36 will be toooo gooood.

@cynosure

ya me too.. coz i am going there for my undergrads..