Bhavin

Parikh (Team Leader)

25
Harsh Pandav
26
Dhruv Shah
18
Dhrumil Jadia
Dylan Coelho

12
11

What is
The process
of losing
value

Increase in
monetary
value

What
How

is currency value?

currency value is decided?

There are many economic factors, which decide

the value of a currency.

A currency will tend to become more valuable
when its demand is higher than supply. It is the
basic theory.
Exchange rates are expressed as a comparison
of two currencies and it is always relative.
Interest rates, rate of inflation and exchange rates
are correlated

Case Study(Deepak
Traders)

Deepak Traders are the Manufacturers &

Exporters of Home Textile products covering
cotton textile made ups & fabric like Bed Linen,
Terry Towel, Beach Towel, Bath Towel, Cushion
Cover, Curtain, Kitchen Towel, Table Linen, etc.
They established in this business in 1983.
They are exporting from last 10 years to EEC /
USA / CANADA / KENYA and have their own
quality control. Home textile made ups are made
as per buyer's requirement of size, quality and
designs.

Deepak Traders
Prior

Depreciation

Present
Future

Scenario

Scenario

Effects on Crude oil on dollar

appreciation
Crude oil (that is used to make petrol, diesel, kerosene and
LPG) is one such commodity that we import in huge quantities.
Lets assume you can buy 1 barrel of crude oil for US$ 100
today. But you dont have US$ 100 with you. So you go to a
bank, pay it Rs 5,000 and get US$ 100 in return (assuming US$
1 = Rs 50 currently).
Now assume, the rupee depreciates to Rs 60 per US$ (as it
has), and you again need to buy 1 barrel of crude oil. Now you
need to give the bank Rs 6,000 to get US$ 100 in return to pay
for oil.
While the international oil price has remained at US$ 100 per
barrel, it has still gotten expensive for you to buy it because the
rupee has depreciated to Rs 60 per US$, from Rs 50 earlier.
Now convert 1 barrel of oil with everything we import in India.
Rupees deprecation would mean that these imported things will
become expensive for us.

Effects on Stock Market on

Rupees Depreciation

As we discussed above, rupees depreciation negatively

impacts imports. Thus, Indian companies that import a lot of
raw materials will face pressure on their profits if the rupee
continues to weaken against the US dollar, or even if it remains
at the current weak levels.
The companies that import oil derivatives (crude or palm oil) as
raw materials like those from the paint, plastics and FMCG
industries will be especially hurt on their margins in the short
to medium term.
Also, companies that have foreign borrowings on their books
will see a negative impact on their profits.
On the other hand, Indian companies (like those from the IT
and pharmaceutical sectors) that are major exporters, will
benefit from the falling rupee.
So, overall, while rupees current depreciation is bad for you as
a consumer or an investor in companies that import a lot, it is
good if you own a software company or are an investor in one
of them.

Current Value of
Rupees V/S Dollars

Why rupee is depreciating now and

how it will affect you?

Conclusion
The weakening of US Economy and falling
of Dollar against Indian Rupee has brought
shivers in the Indian Export Industry.
This has already resulted in slowing down of
Indian Economy and affecting the export
oriented sectors drastically such as Textile,
Information Technology etc.
If such fall continues it will worsen the
conditions
and will hamper the growth of booming Indian
Economy
But as it is said every coin has 2 sides, the
weakening of Dollar has made import cheaper
and is benefiting the Indian Importers.

Dollar V/S Rupees (last 6

Month)