The Indian Rupee-US Dollar

Exchange Rate
The Economic Impact of a
Strengthening Currency
Case study
Reference no 208-001-1
This case was written by Barnali Chakraborty and Sachin Govind, under the
direction of Saji Sam George, ICFAI Center for Management Research. It is
intended to be used as the basis for class discussion rather than to illustrate
either effective or ineffective handling of a management situation. The case was
compiled from published sources.
2008, ICFAI Center for Management Research (ICMR).
No part of this publication may be copied, stored, transmitted, reproduced
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208-001-1
2
THE INDIAN RUPEE-US DOLLAR EXCHANGE RATE: THE
ECONOMIC IMPACT OF A STRENGTHENING CURRENCY
The profitability of exporters has been wiped out and constant appreciation is threatening the
competitiveness of our product. If we lose the market, aggressive competitors are just sitting on
the fence to occupy the market.
1

- G.K. Gupta, President of the Federation of Indian
Export Organizations (FIEO),
2
in October 2007
The government is concerned over the rapid appreciation of the rupee against the US dollar
and the central bank may have to intervene if there is disorderly movement in the exchange
rate.
3

- P Chidambaram, Finance Minister of India, in September, 2007
The objective of the exchange rate management has been to ensure that the external value of the
rupee is realistic and credible as evidenced by a sustainable current account deficit and
manageable foreign exchange situation. Subject to this predominant objective, the exchange rate
policy is guided by the need to reduce excess volatility, prevent the emergence of destabilizing
speculation activities, help maintain adequate level of reserves, and develop an orderly foreign
exchange market.
4

- RBIs Policy in the Foreign Exchange Market
INTRODUCTION
In April 2007, on the back of a rising rupee, the Indian economy became a trillion dollar
5
-
economy, moving the country into an elite group of nations (Refer Exhibit I for the List of
Trillion Dollar Economies). By August 31, 2007, the Indian currency was trading at 40.96
against the dollar, as compared to 46.55 on August 31, 2006, an appreciation of around 12
percent (Refer Exhibit II for Rupee-Dollar Exchange Rate Movement from August 2006 to
August 2007).
The rise in the value of the rupee was a result of the general weakening of the dollar in
international markets, plus Indias growing attractiveness to foreign investors. In 2006-07, India
attracted huge capital inflows in terms of foreign direct investment (FDI),
6
and foreign
institutional investment (FII).
7
External commercial borrowings (ECB)
8
and non-resident Indian
(NRI) deposits and remittances also contributed to the dollar inflow.

1
Exporters Seek Government Intervention on Rupee Rise, www.newspstindia.com, October 1, 2007.
2
The Federation of Indian Export Organizations (FIEO) is a non-profit organization set up by the Ministry
of Commerce, Government of India in 1965, to coordinate and focus the efforts of organizations engaged
in export promotion in the country. (Source: http://fieo.org)
3
Rapid Rupee Appreciation is a Matter of Serious Concern: FM, www.newindpress.com, September 27,
2007.
4
T.C.A. Ramanujam, Currency Crossfires, www.thehindubusinessline.com, June 27, 2003.
5
Dollar ($) denotes US dollars in this case study.
6
An investment made to acquire lasting interest in enterprises operating outside the economy of the
investor is called foreign direct investment (FDI). (Source: http://en.wikipedia.org)
7
Foreign institutional investment is a part of foreign portfolio investment which involves holding securities
such as stocks, bonds, or other financial assets by foreign investors. In India, foreign institutional investors
have to register with the Securities and Exchange Board of India (SEBI) to participate in the market. There
are limits on the ownership by foreign institutional investors in Indian companies.
208-001-1
3
Although India had been witnessing strong dollar inflows for some time, the rupee had not
appreciated as steeply as it did between September 2006 and July 2007 mainly because on earlier
occasions, strong dollar inflows into India usually saw the Reserve Bank of India (RBI)
9
, Indias
central bank, intervene in the foreign exchange market and purchase excess dollars so as to
minimize volatility in the value of the rupee. This time around, the RBI chose not to intervene, in
order to keep domestic inflation, which had been hovering around 6 percent in early 2007, in
check.
While the RBI and the finance ministry were able to tame the inflation rate (inflation fell to
3.52% in August, 2007), the rupees appreciation affected Indian exporters as Indian goods
became more expensive for foreign buyers. Information technology (IT) and textiles industries
were particularly hard-hit, as they were the most dependent on the US. Leather, sugar, and
plantation crops were some of the other sectors that were starting to lose competitiveness. The
Indian Micro, Small and Medium Enterprises (MSMEs) were also affected. It was feared that
falling export competitiveness would cause substantial job losses.
On the other hand, the rupees appreciation against the dollar was a welcome development for
Indian importers, who were happy to pay less for their imports in terms of rupees. Sectors which
were neither net exporters nor net importers were unaffected.
Analysts were divided in their opinion on the long-term effects of the rupees appreciation
against the dollar on the Indian economy. Some believed that as exports as a percent of GDP are
low in India, the rupees appreciation against the dollar, though sure to impact exports, would not
significantly affect the economy as a whole. They were also confident that Indian exports would
gradually regain competitiveness. However, others were not so optimistic and were in favor of
the RBI intervening in the foreign exchange market.
In July-August 2007, the government of India announced measures to counter the negative
impact of the rupees appreciation on Indias exports. The RBI also started buying dollars from
the market to absorb the oversupply of dollars, indicating that the rupee-dollar rate had crossed
the comfort zone of the central bank.
BACKGROUND NOTE
In India, the RBI had always played an active role in the foreign exchange market. However,
since the country faced a severe balance of payments (BOP)
10
crisis in the early 1990s, there was
a greater understanding of the importance of the rupee-dollar exchange rate on the economy.
With reserves down to only around $ 1 billion in mid-1991, caused partly due to a fall in exports
and also due to a decline in remittances (following the Gulf war), the country was close to
defaulting on its debt repayments. The Indian government then negotiated with the IMF
11
for

8
ECBs include bank loans, suppliers and buyers credits, fixed and floating rate bonds (without
convertibility) and borrowings from private sector windows of multilateral financial institutions such as
International Finance Corporation. (Source: www.banknetindia.com)
9
The RBI was established on April 1, 1935. Initially a shareholders bank, the RBIs functions included
regulating the issue of currency notes, maintaining reserves to ensure monetary stability, and operating the
credit and currency system of the country.
10
The balance of payments (BOP) measures the payments that flow between any individual country and all
other countries. It is used to summarize all international economic transactions for that country during a
specific time period, usually a year. The BOP is determined by the countrys exports and imports of goods,
services, and financial capital, as well as financial transfers. It reflects all payments and liabilities to
foreigners (debits) and all payments and obligations received from foreigners (credits).
11
The International Monetary Fund (IMF) is an international organization that oversees the global financial
system by observing exchange rates and balance of payments, as well as offering financial and technical
assistance when requested.
208-001-1
4
SDR
12
of around $ 2 billion to stave off any external debt crisis.
13
However, when the crisis
deepened, the country had to mortgage a part of its gold reserves with the Bank of England. In
June 1991, the rupee (Refer Exhibit III for some background information on the rupee) was
officially devalued by around 20 percent. In 1991, as part of its agreement with the IMF, India
liberalized its economy and following this, BOP stability was more or less restored in the period,
with foreign exchange reserves increasing to $ 9.2 billion by end March 1992.
In March, 1992, the Liberalized Exchange Rate Management System (LERMS) was introduced
under which a dual exchange rate
14
was adopted. In March 1993, the LERMS was replaced by
the unified exchange rate system and the system for setting exchange rates changed from a
controlled system to a managed float system.
15
In 1993-94, the rupee was made freely convertible
for trading, but not for investment purposes.
After liberalization, Indias exchange rate policy focused on managing the fluctuation of the
rupee-dollar exchange rate and at the same time allowing the demand and supply conditions to
determine the exchange rate. Post-1991, the RBI intervened in the foreign exchange market
whenever it deemed necessary and took suitable measures to counter speculative pressures on the
rupee and maintain stability in the foreign exchange market, also with an eye to maintaining
Indias external competitiveness. It purchased or sold dollars in order to reduce the excess supply
of or excess demand for dollars.
From 1991 to 2002, the rupee depreciated steadily against the dollar, from Rs 17.94 to Rs 48.15.
This happened despite foreign exchange inflows that increased the foreign exchange reserves of
the country from $ 5.8 billion to $ 51.05 billion during the period. The reserves grew in large part
due to a healthy increase in exports (from $ 18.48 billion to $ 44.91 billion
16
). Growth in private
transfers, especially remittances from migrant workers, increased manifold from $ 2.08 billion to
$ 12.19 billion. Export earnings from the software sector increased from practically zero in 1992-
93 to $ 7.17 billion in 2001-02. Foreign capital inflows in the form of FII and FDI also
contributed to the growth in foreign exchange reserves.
Between January 2003 and March 2004, the rupee began to steadily appreciate against the dollar.
In 2004, the period between March and November was marked by fluctuations in the exchange
rate. From December 2004 to September 2005, the exchange rate remained at more or less the
same levels. The next year was again a period of fluctuating exchange rates. From September
2006, the rupee again began to appreciate against the dollar (Refer Exhibit IV for rupee-dollar
exchange rate from 1998 to July 2006).
REASONS BEHIND THE APPRECIATION OF THE RUPEE IN 2006-07
Toward the end of 2006, foreign exchange inflows, especially of dollars, into India started rising
sharply. This put upward pressure on the rupees exchange rate against the dollar. Indias steady

12
The SDR or the Special Drawing Right is an international reserve asset created by the IMF in 1969 to
supplement the existing official reserves of member countries. Value of SDRs is based on a basket of key
international currencies. SDRs are allocated to member countries in proportion to their IMF quotas.
(Source: www.imf.org)
13
India joined the IMF on December 27, 1945 as one of IMFs original members.
14
In a dual exchange rate system, both fixed and floating exchange rates are applied in the market. The
fixed rate is applied only to certain segments of the market such as imports and exports, and/or current
account transactions, and a market-driven (floating) exchange rate is applied to capital account
transactions. (Source: www.investopedia.com)
15
Managed float regime is the current international financial environment in which exchange rates
fluctuate from day to day, but central banks attempt to influence their countries exchange rates by buying
and selling currencies. It is also known as a dirty float. (Source: http://en.wikipedia.org)
16
Harish Damodaran, Forex Reserves: From Penury to Plenty, www.blonnet.com, November 29, 2002.
208-001-1
5
economic growth offered several opportunities for foreign companies. Between April 2006 and
March 2007, FDI of $ 16 billion flowed in to India. This was around three times the preceding
years figure. More than 50 percent of these inflows arrived between December 2006 and March
2007. By August 24, 2007, Indias foreign exchange reserves had increased to a record $ 228.8
billion (Refer Exhibit V for Indias foreign exchange reserves between 1991 and 2006).
Indias booming stock market contributed to the foreign exchange inflows. In 2006-07, FII
inflows increased by 61 percent (year-on-year) to touch $ 105.8 billion. The net FII inflows for
the year were $ 7.99 billion. In the first five months of 2007-08, net FII inflows crossed $ 8.4
billion. Portfolio capital inflows also came from overseas equity issues of Indian companies via
global depositary receipts (GDRs)
17
and American depositary receipts (ADRs).
18
Inflows from
GDRs and ADRs amounted to $ 3.8 billion in 2006-07 with a year-on-year increase of 48
percent.
Apart from the equity issues, several Indian companies borrowed massive amounts of money,
mostly in dollars, from abroad to fund investments and acquisitions in India, and this also
contributed to the dollar inflows. The first quarter of 2007-08 (April-June) recorded ECBs of $
48.3 billion, an increase of 12.9 percent compared to the first quarter of the previous year.
19

Another major source of capital inflows was non-resident Indian (NRI) deposits in bank accounts
in India. As Indian banks offered higher interest rates on deposits than overseas banks, NRIs
preferred to invest in India. The NRI deposits stood at $ 42.6 billion as of June 2007.
20

Remittances from Indians working overseas also saw an increase to reach $ 27.2 billion in 2006-
07 compared to $ 24.1 billion in 2005-06 (Refer Exhibit VI for remittances to India between
1990-91 and 2005-06, and Exhibit VII for the source regions of remittance flows to India in
November 2006).
Export growth also contributed to Indias increasing foreign exchange reserves. IT and business-
process outsourcing (BPO) exports increased rapidly in 2006-07 to cross $ 31.9 billion, a year-
on-year increase of around 32 percent.
Some analysts were of the view that the slowdown in the US economy was the primary reason
for the dollar inflow into emerging economies, including India. According to Avinash Vashistha,
MD, Tholons, a global services and investment consulting firm, This scenario will continue
considering that India is booming and interest rates are high here, while the US economy is
facing a slowdown and interest rates are falling.
21
The dollar also depreciated against other
major currencies. Between August 2006 and August 2007, the euro appreciated against the dollar
from 0.78 to 0.73, the British pound appreciated from 0.53 to 0.49, and the yen appreciated from
117.35 to 115.83.
The sub prime mortgage crisis in the US was another reason for the large dollar inflows in to
India. While the U.S. has managed such monetary fluctuations in the past (sub prime crisis), in
the present context, there are impacts on India and other emerging markets and the government
will carefully study the rupee movement and to what extent we can stand the current liquidity
surge and hot capital inflow, with overseas financial institutions looking here for better returns,

17
Global depositary receipt or GDR is a bank certificate issued in more than one country for shares in a
foreign company. The shares are held by a foreign branch of an international bank. The shares trade as
domestic shares, but are offered for sale globally through the various bank branches. (Source:
www.investopedia.com)
18
American Depositary Receipt or ADR is the ownership in the shares of a foreign company trading on US
financial markets.
19
Indias External Debt as at the End of June 2007, http://rbidocs.rbi.org.in, September 28, 2007.
20
Indias External Debt as at the End of June 2007, http://rbidocs.rbi.org.in, September 28, 2007.
21
Mini Joseph Tejaswi, Rupee Appreciation to Hit Software Cos, www.economictimes.indiatimes.com,
March 29, 2007
208-001-1
6
said Parthasarathi Shome, Advisor to the Union Finance Minister.
22
The increase in oil prices
resulted in increased liquidity in the Gulf countries, and some of this was also believed to be
being diverted to India.
The increased inflow of dollars into the Indian market certainly put upward pressure on the rupee.
This upward pressure was not neutralized, because the RBI, which till late 2006 had been
following the policy of managed float in the foreign currency market, decided in September 2006
to stop intervening in the foreign exchange market. Apparently, the RBIs decision not to
intervene was taken in order to control the inflation rate, which had begun to be a cause of
concern to the central bank as well as the government. In early 2007, the inflation rate, as
measured by the wholesale price index (WPI)
23
, hovered around 6-6.8 percent, well above the
level of 5-5.5 percent acceptable to RBI. On February 15, 2007, inflation reached a two year high
of 6.73 percent (Refer Exhibit VIII for the inflation rates between August 2006 and August
2007). By allowing the rupee to appreciate, the RBI hoped to control inflation by making
imported goods cheaper. Also, the rise in the value of the rupee was expected to make some
Indian export items, especially food products, less competitive in overseas markets, thus forcing
exporters of these products to release them in the domestic market. This was expected to increase
the supply of goods and bring down domestic prices.
Previously, whenever there had been upward pressure on the rupee, the RBI would buy dollars
from the market. This resulted in an equivalent amount of rupees being released into the domestic
market (as domestic money supply is related to the RBIs reserve holdings). To absorb this
oversupply of rupees, the RBI had been selling government bonds under the market stabilization
scheme (MSS). However, sterilization, as this process was called, led to the oversupply of
government bonds in the market thus bringing down their prices. As bond prices share an inverse
relation with interest rates on bonds, any fall in bond prices would translate to higher interest
rates. And the increase in interest rates attracted more capital inflows from abroad, with the RBI
forced to repeat the sterilization process. This unending process was another reason why the
RBI decided to stop intervening in the foreign exchange market.
The trend of steady month-on-month appreciation of the rupee began in September 2006 and
continued through the first eight months of 2007. By August 2007, the rupee-dollar exchange rate
reached 40.63, from 46.45 in August 2006.
EFFECTS ON THE ECONOMY
The rupees appreciation against the dollar was seen to be beneficial to the Indian economy in
some ways, and detrimental in other ways. The rise in the value of rupee meant that inflation was
curbed. The inflation rate in India declined from 6.73 percent in February 2007 to 4.10 percent in
August 2007. A strengthening rupee brought down the price (in rupee terms) of food products. A
serious supply shortage of food products was believed to be the primary reason behind the
inflation rate increasing in the first half of 2007. The rupees appreciation also cushioned the
impact of increasing crude oil prices in the international market.
The rupees appreciation also benefited importers as well as manufacturers who depended on
imported raw materials. Companies in sectors such as oil and gas, automobile, engineering and
aviation were able to import items at much cheaper rates (in rupee terms) than before. As the
procurement prices of oil companies depended on international crude oil prices, which were
denominated in dollars, the rupees appreciation absorbed some of the international price
escalation. This was a welcome development as the public sector oil companies had been

22
Tackling U.S. Sub-prime Crisis in India, www.hindu.com, October 6, 2007.
23
The Wholesale Price Index (WPI) is the index that is used to measure the change in the average price
levels of goods (both agricultural and industrial) traded in the wholesale market (compared to the base year
1993-94). In India, the WPI is taken as the indicator of the rate of inflation and includes in all 435 items.
208-001-1
7
incurring losses
24
. The dent would have been larger had not the rupee appreciated,
25
a senior oil
company official said.
Similarly, companies importing cement saw their net payments (in rupees) for imports reduce.
The capital goods sector also benefited.
As with oil, in the case of some other commodities too, the rupees appreciation reduced the
impact of increases in their international prices. The currency appreciation was also a positive for
the governments financials. The rupees appreciation reduced Indias external debt. As on
December 2006, India had an external debt of $ 142.65 billion which decreased to $ 132.66
billion following the rupees appreciation.
Companies that had borrowed in dollars from international banks also benefited from the rupees
appreciation as the rupee value of the loans decreased.
As a result of the rupees appreciation, Indian tourists traveling abroad saw their rupees stretch a
bit further than before. Vishal Suri, COO of Thomas Cook India, said, Though no immediate
effect is seen in travel packages, it (rupee appreciation) will give Indians the freedom to spend
more while traveling. The overall sentiment is going to be positive for all markets, be it the US,
Far East or Europe, as most destinations have dollar as a common currency for conversions.
26

However, the rupees rise against the dollar was beginning to have an adverse impact on the
Indian export sector. Around 86 percent of Indian exports and 89 percent of imports were
denominated in dollars (2005-06 data)
27
and with the rupee strengthening against the dollar,
Indian products were becoming more expensive in overseas markets, thus adversely affecting
their international competitiveness. The cumulative export growth for the period April-August
2007 declined to around 18 percent, compared to around 24 percent in the corresponding period
in 2006. The RBIs deputy governor, Rakesh Mohan, referred to the effects of the rupees
appreciation on the countrys export sector as a case of Dutch disease.
28

According to an Associated Chambers of Commerce and Industry of India (ASSOCHAM)
study,
29
the export sectors affected most as a result of the appreciation of the rupee were IT and
IT-enabled services, textiles, leather, and sugar.
30
The rupees appreciation also affected the
profitability of exporters of meat and spices. The pharmaceutical sector was also moderately
affected.

24
In India, the retail price of petrol and diesel is determined by the government. Owing to political
compulsions, the government had more or less frozen petrol and diesel prices. With increase in the
international price of crude oil, the losses incurred by the public sector oil companies were mounting.
25
Richa Mishra, Oil Cos: Rupee Gain Softens Impact of Crude Prices, www.thehindubusinessline.com,
May 23, 2007.
26
Shubhra Tandon, Re Appreciation a Boon for Outbound Tourism, www.thehindubusinessline.com,
September 22, 2007.
27
Indian exports and imports in euros accounted for 8 percent and 7 percent respectively of all exports and
imports.
28
The term Dutch Disease was coined by The Economist in 1977 to describe the decline of the
manufacturing sector in the Netherlands after the discovery of natural gas in the 1960s. The economic
model describing Dutch disease was later developed by W. Max Corden and J. Peter Neary in 1982. The
model describes Dutch Disease as the adverse effect on any sector(s) of an economy caused by large inflow
of foreign currency in to the economy and appreciation of the domestic currency.
29
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) was established in 1920
by promoter chambers representing all regions of India. It is Indias premier apex chamber with
membership of over 100,000 companies and professionals across the country. (Source:
www.assocham.org)
30
Rupee Appreciation to Result $15 bln Fall in Exports in 2007-08, www.indiantaxsolutions.com, July
7, 2007.
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8
As a high percentage of revenues in most IT and some pharmaceutical companies were in dollar
terms, any appreciation of the rupee affected their revenue realization and consequently their
profit margins. V Balakrishnan, Chief Financial Officer of Infosys Technologies Ltd (Infosys),
31

said, In spite of taking forward cover and hedging $ 373 million during the quarter under
review, the rupee appreciated to Rs 44.53 from Rs 46.29 and impacted our operating margins by
200 base points (two percent) and led to a revenue loss of Rs 1.45 billion.
32

According to US Department of Commerce data, Indias textile and apparel exports to the US
declined by 0.21 percent in the first half of 2007, even when USs total textile imports increased
by 5.70 percent in the same period. China was able to increase its textile exports to the US by
33.78 percent, Vietnam, by 21 percent, Cambodia, by 18.5 percent, Indonesia, by 16.5 percent,
and Bangladesh, by 13.6 percent
33
(Refer Exhibit IX for the exchange rate of dollar against
currencies of some of Indias competitors).
In the 11
th
Five Year Plan, the Indian government had set an apparel export target of 6 billion
pieces at $ 34.02 billion by 2011-2012. However, according to Amit Goyal, President of
Confederation of Indian Apparel Exporters (CIAe)
34
, with the rupee appreciating against the
dollar, India would not be able to reach the export level of even the previous year.
35
He also said
that considering the fact that employment in the sector depended directly on export orders, the
decline in export orders would adversely affect employment in the sector. Prakash Thakkar,
Managing Director of Jal Exports, said, I am willing to close down. In fact, I have started to
reduce my business, reduce my staff to ensure a smooth exit from the apparel export businessI
believe the worst is yet to come.
36

The strengthening of the rupee against the dollar also affected exporters of plantation crops.
Monthly tea exports declined from 106.6 million kg in January 2007 to 86.1 million kg in July
2007. Coffee exports also fell from 199,761 tons in January-September 2006 to 176,699 tons in
January-September 2007. Ashok Kurian, Chairman of the Specialty Coffee Association of India,
said, Nearly 80 percent of 3 lakh (300,000) ton coffee produced annually in India is exported.
We do not have a strong domestic market and our dependence on the export market exposes us to
currency fluctuations.
37

The rupees appreciation made Indian cashew exporters vulnerable to competition from Vietnam
and Brazil; and Indian sugar companies lost export orders to companies based in China and
Thailand. With the rising rupee, Indian pharmaceutical companies too were expected to lose their
competitiveness to Chinese and East European companies.
The rupees appreciation also affected the export competitiveness of the MSMEs, which
accounted for around 34 percent of national exports. According to the Confederation of Indian

31
Infosys Technologies Ltd. is a leading provider of consulting and IT services globally.
32
A Record Appreciation of the Indian Rupee in the Forex Market by 3.8 Percent Dampening IT
Outsourcing Margins, www.indiadaily.com, January 11, 2007.
33
Sanjeev Choudhary, Rise in Rupee, Sluggish Sales Take Toll on Apparel Exports to US,
www.economictimes.indiatimes.com, August 27, 2007.
34
The Confederation of Indian Apparel Exporters or CIAe is an industry association of garment exporters,
set up in 2001.
35
India: Apparel Exporters Reel under Severe Order Crunch, CIAe, www.fibre2fashion.com, October
11, 2007.
36
India: Apparel Exporters Reel under Severe Order Crunch, CIAe, www.fibre2fashion.com, October
11, 2007.
37
Coffee, Tea Exporters Feeling Rupee Rise Heat, www.livemint.com, September 27, 2007.
208-001-1
9
Industrys (CII)
38
19
th
Business Outlook Survey, more than 50 percent of the respondents from
MSMEs expected a negative impact on their business because of the appreciation of the rupee.
39

Employment in various export sectors was expected to decline. According to the study
commissioned by the commerce ministry, the rupees appreciation resulted in 11,000 job losses
in the textiles and garment sector and 1,900 job losses in the leather sector in March-June 2007.
40

However, companies that were both importers and exporters were not hurt by the appreciation of
the rupee. For example, the gems and jewelry sector, which imported unpolished gems and
bullion metals and exported polished gems and jewelry, seemed to have withstood the impact of
rupee appreciation.
With the rise in the value of the rupee, foreign tourists found it more expensive to come to India.
This was expected to have a negative impact on the tourism industry. According to Himmat
Anand, Chief Operating Officer of SITA
41
in India & South Asia, The weak dollar is bound to
affect the inbound travel, which can become less attractive for travelers.
42

SOME PERSPECTIVES
The trilemma or the impossible trinity as economists sometimes called the management of
exchange rate, interest rate, and inflation rate, has always posed problems for central banks the
world over; and the RBI was not an exception. The central bank of any country has to ensure that
the interest rates keep inflation in check, but at the same time do not stifle investment; the
exchange rate promotes exports, not stifle them; and lastly the exchange rate and the interest rate
manage capital inflows without restricting them. This was a challenge for the central banks of
even the highly developed economies of western countries. However, analysts were of the view
that, largely, the RBI had been managing the trinity quite well for the last few years, at least until
inflation levels started rising in early 2007.
Most analysts were of the view that the RBIs first priority should be to rein in inflation and they
supported RBIs policy of non-intervention in the foreign exchange market. However, some were
of the view that the RBI should have let the rupee appreciate gradually rather than leave the rupee
to the mercy of market forces. Citing the example of China, analysts explained that though that
country attracted far more in foreign investment than India, its currency appreciated only by
around 2% (between March and July 2007).
Some analysts were of the view that the rupees appreciation was positive as it would put
pressure on exporters to improve, update, and modernize. They cited the example of the Japanese
export industry in the 1990s, when it faced an appreciating yen, from nearly 230 yen to a dollar to
around 130. The Japanese export industry responded by improving its productivity and
introducing product innovations. Indian exporters, they said, too should view the rupees

38
The Confederation of Indian Industry (CII) was founded in 1895. It is a non-government, not-for-profit,
industry led and industry managed organization. It has direct membership of over 6,500 organizations from
the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over
90,000 companies from around 350 national and regional sectoral associations. (Source:
www.ciionline.org)
39
India: Rupee Appreciation Unable to Stem MSME Export, www.fibre2fashion.com, October 2, 2007.
40
Mahendra Kumar Singh, Strong Re May Shave off USD 13b Exports,
www.timesofindiaindiatimes.com, July 26, 2007.
41
SITA Inbound is one of the largest Indian companies in the tourism industry. It operates inbound tours to
India from all over the world, with tour operations and marketing activities centralized at their head office
in New Delhi. (Source: www.sitaindia.com)
42
Shobha Kannan, Strong Re, Overpricing Likely to Hurt Inbound Tourism,
www.thehindubusinessline.com, October 9, 2007.
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10
appreciation as a challenge. They however agreed that the government had a significant part to
play and should invest in infrastructure as well as in education and training of human resources.
Kamal Nath (Nath), Minister of Commerce & Industry, while agreeing with exporters that the
appreciation of the rupee against the dollar was a major concern, asked them to make efforts to
improve efficiency. He said, Rupee rise is no doubt a problem, but it is also an opportunity for
all of you to move towards greater efficiency, reducing costs and enhancing competitiveness.
43

However, in July 2007, he announced some measures to offset the negative impact of rupees
appreciation on Indias exports (Refer Exhibit X for the recommendations of the Ministry of
Commerce).
Some analysts advised exporters to decrease their dependence on dollars, asking them to shift
their invoicing to more stable and balanced currencies like the British pound (Refer Exhibit XI
for the exchange rate of the rupee with some major currencies between January 2007 and
August 2007). Others felt that exporters should reduce their dependence on the US market.
Commenting on a possible way out for textile exports, D K Nair, Secretary General of
Confederation of Indian Textile Industry (CITI)
44
, said, It is evident that the textile industry has
to cope up with the rupee appreciation and for that defocusing of the US market and currency is
one strategy that the industry will have to adopt. Few industry players are already looking for
other markets and trying to do business in other currencies.
45
Still others advised exporters to go
for hedging in order to minimize impact of a sharp rise in the exchange rate. Puneet Chaddha,
Country head Commercial Banking, HSBC,
46
said, The time has finally come that companies
need to respond with interesting hedging strategies which would benefit them, in an appreciating
rupee environment.
47

With the rupees appreciation, considering its overall trade deficit (imports of $ 190 billion
against exports of $ 126 billion in 2007), Indian economy was a net gainer. Analysts saw this as a
benefit of currency appreciation. However, others were of the view that this was a short term gain
and continuous appreciation of the rupee was detrimental for the economy as there would be
considerable job losses.
Some analysts were in favor of the rupees appreciation. They were opposed to giving too much
importance to exports. They added that as India itself was a huge market, with exporters of other
countries looking at Indian markets with interest, Indian exporters should make efforts to develop
the domestic market. Domestic consumption, according to them, would obviate the need to
depend on exports for job creation.
Some were of the view that Indian companies as well as the government could ease the upward
pressure on the rupee by investing in assets abroad. The central bank had been easing restrictions
on outward investment, with total international assets of India in the last five years (between
2001-02 and 2006-07) increasing at an annual compound rate of 24.2%. However, there was
room for further liberalization of norms. Others felt that as the continued appreciation of the
rupee was expected to make ECBs more attractive for Indian companies, even at an unchanged
interest rate differential, the RBI should impose tighter restrictions on ECBs so as to control
dollar inflows.

43
Kamal Nath Announces Package to Counter Impact of Rising Rupee on Exports-Assures Exporters of
All to Reach Export Target of US $ 160 Billion, www.commerce.nic.in, June 13, 2007.
44
Confederation of Indian Textile Industry (CITI) is a trade association of cotton, blended and man-made
yarn spinning mills and fabric manufacturers. (Source: www.citiindia.com)
45
India: Textile Industry Must Cope with Rupee Appreciation CITI, www.yarnsandfibers.com,
October 2, 2007.
46
HSBC is one of the largest banking and financial services organizations in the world.
47
Firms Look at Ways to Control Effects of Re Appreciation, www.economictimes.indiatimes.com,
October 4, 2007.
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OUTLOOK
In June, 2007, the Economist Intelligence Unit
48
estimated that for the year 2007, the rupees
average annual exchange rate against the dollar would be 41.3 (a 13.5 percent real appreciation
year on year), and for the year 2008, it would be 40 (6 percent).
49

In the third week of September, 2007, the US Federal Reserve cut interest rates. This saw FIIs
flock to emerging markets, including the Indian market. Between mid-September and mid-
October 2007, over $ 6.6 billion was injected into the Indian market.
50

In September, 2007, in an effort to placate exporters, the government reimbursed service tax paid
by exporters for port, road transport and rail services (Refer Exhibit XII for the measures
taken by the government). However, exporters were not satisfied with the announcement,
saying it was too little too late. Ganesh K. Gupta, President of FIEO, said, The packages
announced by the government [have] not been able to offset our losses. The way the rupee is
rising, it would be negating not only the exports but wipe them out. I think now it is time the
Prime Minister intervenes and takes up the matter seriously.
51

In response to the demand for government intervention, Nath said, The rising rupee is a matter
of concern. The government is very much looking at it and it needs a new response.
52

Chidambaram also said that if the package offered to exporters did not address their problems,
the government would think of coming up with a more suitable package. However, he advised
exporters to learn to hedge and reprice their export contracts.
In August 2007, the RBI again began to intervene in the foreign exchange market by purchasing
dollars. The RBI also made it more difficult for Indian firms to borrow in foreign currency. In an
effort to check capital inflows, the RBI introduced new rules concerning ECBs. Henceforth,
companies wishing to go in for ECBs (to be used as rupee expenditure) were required to take
prior approval from the RBI. The RBI also placed a limit of $ 20 million per company per
financial year. While ECBs of up to $ 20 million per company to be used as foreign currency
expenditure for specified end-uses was to come under the automatic route, ECBs of more than $
20 million was to require special RBI approval. In either case, the proceeds would have to be
parked abroad. The RBI also increased the annual limit on the amount of remittances from India
from $ 50,000 to $ 100,000.
53
The RBI also increased the sterilization bond limit by Rs 400
billion to Rs 1.5 trillion.
54

In September 2007, the Finance Minister, while addressing a gathering in Washington D.C. said
that the rupee-dollar exchange rate was market-determined and that the RBI would do the needful
to control volatility. The rupees real and nominal effective exchange levels are way beyond
comfort levels at the moment, but that is something we have to learn to live with. This is market-
determined and it will be market-determined; but if there is volatility or any disorderly movement
I suppose the central bank will intervene using whatever instrument it has. The government does
nothing on that behalf, said Chidambaram.
55


48
The Economist Intelligence Unit, founded in 1946, is a leading research and advisory firm, with more
than 40 offices worldwide.
49
India Finance: Rupee Dilemma, www.viewswire.com, June 26, 2007.
50
2007 FII Inflows Hit $16 Billion, www.indianexpress.com, October 12, 2007.
51
Steps Soon to Address Rupee Appreciation: Kamal Nath, www.andhracafe.com, September 20, 2007.
52
Steps Soon to Address Rupee Appreciation: Kamal Nath, www.andhracafe.com, September 20, 2007.
53
Ila Patnaik, Get Real about the Impossible Trinity, www.financialexpress.com, May 24, 2007.
54
Market Stabilisation Scheme: Revision of Ceiling, www.rbi.org.in, August 08, 2007.
55
Rapid Rupee Appreciation Is A Matter Of Serious Concern: FM, www.newindpress.com, September
27, 2007.
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In October, 2007, the RBI increased the limit for bond issuance under the market stabilization
scheme (MSS)
56
from Rs 1.5 trillion to Rs 2 trillion for the fiscal year 2007-08.
In October 2007, the Directorate General of Foreign Trade (DGFT) carried out a survey to study
the actual impact of the rupee appreciation on industries. The Directorate, which came under the
Union Commerce Ministry, was to assess the problems faced by the industries, including falling
profitability, and job losses due to the rupees appreciation and submit its report to the central
government.
While Nath had said in September 2007 that there would be no change in the 2007-08 export
target, in October 2007, Commerce Secretary Gopal K. Pillai said, It looks unlikely that the $
160 billion export target would be achieved for the current fiscal. We would be quite pleased if it
reached even $ 140 billion, estimating that the local currency appreciates to 38 a dollar.
57

Some international institutions estimated that the RBI would not allow the rupee to appreciate
further. Subir Gokarn, chief economist for Asia Pacific, Standard and Poors
58
, said, We expect
the Reserve Bank of India to resist appreciation beyond current levels and the rupee will end the
year at around 40.50 per dollar.
59


56
The market stabilization scheme was introduced by the government and RBI in early 2004 to tackle
strong capital inflows.
57
India Unlikely to Meet Export Target, www.tradeindia.com, October 10, 2007.
58
Standard and Poor is a leading credit ratings, investment research, risk evaluation, and policy advisory
company.
59
Rupee Hits 9-1/2 Yr High, Stocks Support, www.livemit.com, October 10, 2007.
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EXHIBIT I
TRILLION DOLLAR ECONOMIES AS OF 2006










*GDP based on exchange rate in 2006.
India, together with Russia, became a trillion-dollar economy in early 2007
Source: World Bank, 2006

EXHIBIT II
INDIAN RUPEE-US DOLLAR FOREIGN EXCHANGE RATE: AUGUST 2006-AUGUST
2007
Exchange rate
(As on last day of the month)
August 46.55
September 45.96
October 45.02
November 44.76
2006
December 44.23
January 44.17
February 44.31
March 43.59
April 41.29
May 40.73
June 40.75
July 40.44
2007
August 40.96
Source: www.rbi.org.in.

SNO Country GDP*
(in million USD)
1 United States 13,201,819
2 Japan 4,340,133
3 Germany 2,906,681
4 China 2,668,071
5 United Kingdom 2,345,015
6 France 2,230,721
7 Italy 1,844,749
8 Canada 1,251,463
9 Spain 1,223,988
10 Brazil 1,067,962
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EXHIBIT III
THE INDIAN RUPEE: BACKGROUND
The history of currency in India dates back to the 6
th
Century B.C., when first merchant guilds
and later kings and chieftains issued silver coins as a medium of exchange to facilitate trade. The
rupee derived its name from the word rupyakam meaning silver coin in the Sanskrit language.
The forerunner to the modern Indian rupee was introduced by Sher Shah Suri, a sixteenth century
ruler. The rupee, a silver coin weighing about 11.34 grams, was to remain the chief currency of
India till the early 20
th
century. One rupee was divided into 16 annas and each anna was in turn
divided into 4 paisa.
In the 1770s, private and semi-government banks issued the first currency notes in India. Till
1835, the value of rupee varied from one state to another. With the passage of Coinage Act in
1835, the value of the rupee became more uniform across the country. Beginning in 1835, the
East India Company started issuing a series of coins. After 1857, the British crown took over the
issue of currency.
In the 19
th
century, with the discovery of large silver mines in the US and parts of Europe, the
value of silver declined radically in comparison to gold. The rupee, as it was defined in terms of
silver, saw its value, vis--vis currencies that were pegged to gold, decline. In 1898, the rupee
was pegged to the British pound, with 15 rupees making one pound. In 1920, the value of the
rupee was increased, with 10 rupees now equaling one pound. Again in 1927, the rupee value
was brought down to 13.5 for one pound, which was to remain the exchange rate of the rupee till
1966.
After India achieved independence on August 15, 1947, the rupee was adopted as the sole
currency of the country. In January 1949, the Reserve Bank of India was nationalized. That year,
the rupee was devalued by 30.5 percent following the devaluation of other currencies pegged to
the pound. In 1957, the rupee shifted to the decimal system, with one rupee now equaling 100
paisa.
60

In June 1966, the rupee was devalued by 57.5 percent and its exchange rate against the dollar was
set at 7.50, compared to 4.76 prior to the devaluation. In August 1971, with the Bretton Woods
System (The Bretton Woods system involved member countries agreeing to an exchange rate
system where each currency traded within defined parities with the US dollar) breaking down,
the rupee was pegged to the dollar, with the rupee-dollar exchange rate continuing at 7.50.
However, after the dollar devalued on December 18, 1971, the rupee was again pegged to the
pound on December 20, 1971, with Rs 18.967 equal to one pound. When the pound was floated
on June 23, 1972, the rupee depreciated again. In 1975, the rupee was linked to a basket of
currencies of Indias major trading partners the dollar, the pound, the yen, the Deutsche mark,
and the Italian lira. To express the value of the rupee, the pound was used by the RBI as reference
currency. The RBI declared the official rate of the rupee against the pound on a daily basis.
In 1978, the Indian rupee was given the official ISO 4217 abbreviation of INR IN for India and
R for Rupee.
In March, 1992, the government of India announced full convertibility of the rupee in the current
account. As of 2007, the government was considering full convertibility of the rupee in the
capital account as well.
Compiled from various sources


60
The Indian rupee follows the Indian numbering system. The ancient system groups numbers by two
decimal places rather then three decimal places as is done in the western system. For example, three
hundred thousand (300,000) would be three lakhs (3,00,000), thirty million (30,000,000) would be three
crores (3,00,00,000), and three billion (3,000,000,000) would be three arabs (3,00,00,00,000).
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EXHIBIT IV
INDIAN RUPEE-US DOLLAR FOREIGN EXCHANGE RATE*: 1998-2006
1998 1999 2000 2001 2002 2003 2004 2005 2006
January 39.39 42.55 43.59 46.61 48.35 47.96 45.46 43.62 44.20
February 39.01 42.53 43.65 46.56 48.72 47.75 45.27 43.58 44.23
March 39.57 42.52 43.64 46.65 48.77 47.68 44.97 43.59 44.34
April 39.70 42.80 43.68 46.79 48.94 47.39 43.89 43.64 44.82
May 40.47 42.86 44.08 46.95 49.02 47.11 45.18 43.41 45.20
June 42.37 43.21 44.76 47.04 48.98 46.70 45.50 43.52 45.89
July 42.61 43.36 44.84 47.18 48.79 46.22 46.06 43.43 46.37
August 42.84 43.50 45.77 47.17 48.62 45.96 46.32 43.55
September 42.58 43.60 45.97 47.75 48.46 45.85 46.05 43.85
October 42.39 43.55 46.43 48.05 48.39 45.40 45.74 44.76
November 42.43 43.46 46.82 48.04 48.29 45.55 45.03 45.63
December 42.59 43.52 46.78 47.93 48.15 45.57 43.85 45.56
*As on last day of every month.
Source: www.economagic.com.


EXHIBIT V
INDIAS FOREIGN EXCHANGE RESERVES BETWEEN 1990-91 AND 2005-06

Source: Report on Foreign Exchange Reserves, www.rbi.org.in, July 14, 2006.
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EXHIBIT VI
REMITTANCES TO INDIA IN BILLIONS OF US DOLLARS, 1990-1991 TO 2005-2006

Source: Muzaffar A. Chishti, The Phenomenal Rise in Remittances to India: A Closer Look,
www.migrationpolicy.org, May 2007.

EXHIBIT VII
SOURCE REGIONS OF REMITTANCE FLOWS TO INDIA IN NOVEMBER 2007
North America Europe East Asia South America
Others Af rica Gulf countries

Source: Muzaffar A. Chishti, The Phenomenal Rise in Remittances to India: A Closer Look,
www.migrationpolicy.org, May 2007.
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EXHIBIT VIII
INFLATION RATES IN INDIA
Year Month Inflation rate*
(In %)
October 5.09
November 5.30
2006
December 5.58
January 6.58
February 6.10
March 5.74
April 5.66
May 4.85
June 4.27
July 4.45
2007
August 3.52
* As of last week of the month
Source: http://finmin.nic.in.

EXHIBIT IX
THE EXCHANGE RATE OF DOLLAR AGAINST CURRENCIES OF SOME OF
INDIAS EXPORT COMPETITORS: AUGUST 2006-AUGUST 2007
Exchange rate against dollar Country Currency
August 2006 August 2007 Appreciation in %
Pakistan Pakistan Rupee 60.310 60.642 (-0.55)
Bangladesh Taka 69.110 68.775 0.48
China Renminbi Yuan 7.958 7.547 5.16
Sri Lanka Sri Lankan Rupee 102.51 113.01 (-10.24)
Vietnam Dong 16,010 16,236 (-1.41)
Indonesia Rupiah 9101 9389.6 (-3.17)
Malaysia Ringgit 3.680 3.501 4.86
Source: www.x-rates.com and www.gocurrency.com.


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18
EXHIBIT X
THE RECOMMENDATIONS OF THE MINISTRY OF COMMERCE IN JULY, 2007
1. Duty Entitlement Pass Book (DEPB) and Duty Drawback rates may be enhanced by 5%.
2. Rate of interest on pre-shipment and post-shipment credit be reduced for exporters to 6% (at
present, the rate of interest charged is in the range of 9 to 11%).
3. Exchange Earners Foreign Currency (EEFC) Accounts may be made interest bearing. (As
on date, EEFC Account deposited is stated as current account and interest on it discontinued
since 2000).
4. Scheduled Commercial Banks may be mandated to meet 15% export credit disbursement
target.
5. Notify the Service Tax Exemption / Refunds for exports announced in the Foreign Trade
Policy 2007 without further delay.
6. All arrears of TED (Terminal Excise Duty) & CST (Central Sales Tax) reimbursement
would be cleared by 30
th
June, 2007 and the Ministry of Finance will be requested to provide
additional funds, if necessary.
7. Export Credit & Guarantee Corporation (ECGC) will reduce its premium rates by upto 10%
to make exports more competitive.
8. A Committee is also being set up to assess job losses due to rupee appreciation and loss of
export orders.
Source: Kamal Nath Announces Package To Counter Impact Of Rising Rupee On Exports-Assures
Exporters Of All To Reach Export Target Of US $ 160 Billion, www.commerce.nic.in, June 13, 2007.


EXHIBIT XI
THE EXCHANGE RATE OF RUPEE AGAINST SOME MAJOR CURRENCIES
BETWEEN JANUARY 2007 AND AUGUST 2007
Exchange rate Appreciation Currency
January 2007 August 2007
Pound 86.594 82.005 5.29
Euro 57.450 55.419 3.53
Yen (100) 365.234 350.673 3.98
Australian
Dollar
34.166 33.110 3.09
Canadian
Dollar
37.473 38.432 (-2.55)
Source: www.x-rates.com and www.gocurrency.com.
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19
EXHIBIT XII
THE MEASURES TAKEN BY THE GOVERNMENT
1. Increasing the number of Services for refund/exemption of Service Tax in respect of
Exports.
The list was expanded to include three new services general insurance service, technical
testing and analysis service, technical inspection and certification service. Exporting
community was to be exempted from paying service tax for these services.
2. Provision to pay Interest on EEFC balances.
The government decided to allow interest to be paid on Exchange Earners Foreign Currency
(EEFC) accounts.
Interest should be permissible on outstanding balances to the extent of $ 1 million per
exporter
Rate of interest may be determined by the banks.
This measure would be valid up to October 31, 2007.
Such accounts should be in the form of term deposits with a maturity of up to one year.
3. Interest on pre-shipment and post-shipment credit (extension of period & widening of
coverage of sectors).
The applicable interest rate on pre-shipment credit up to 180 days and post-shipment credit up
to 90 days was Benchmark Prime Lending Rate (BPLR) minus 2.5%. In July 2007, the
government announced a reduction of this maximum rate to BPLR minus 4.5% in respect of
the outstanding amount for the period April 1 to December 31 in 2007. The government agreed
to provide the requisite interest subvention of 2% points to scheduled commercial banks. This
dispensation was made available to the sectors of textiles including handlooms and readymade
garments, leather products, handicrafts, engineering products, processed agricultural products,
marine products, sports goods, toys and all exporters from the SME sector. Now, it was
decided that the coverage would be expanded to the sectors of jute and carpet, processed
cashew, coffee and tea, solvent extracted de-oiled cake and plastics and linoleum. The period
for which the reduction in the interest rate is applicable, is now extended from December 31 to
March 31, 2008. The amount of subvention will be calculated on the amount of export credit
from the date of disbursement up to the date of repayment or up to the date beyond which the
outstanding export credit becomes overdue i.e. for pre-shipment credit up to 180 days and post-
shipment credit up to 90 days, whichever is earlier.
4. Rs 3 billion more for Vishesh Krishi and Gram Udyog Yojana (VKGUY).
The product coverage under VKGUY, a scheme to promote export of agricultural and village
industry products, was expanded to include additional products. For this purpose, the revenue
ceiling fixed for 2007-08 was raised by Rs 3 billion (from Rs 2 billion to Rs 5 billion).
Source: Govt Steps to Counter Rupee Appreciation, www.tradeindia.com, October 8, 2007.



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20
REFERENCES AND SUGGESTED READINGS
1. India: Apparel Exporters Reel under Severe Order Crunch, CIAe,
www.fibre2fashion.com, October 11, 2007.
2. India Unlikely to Meet Export Target, www.tradeindia.com, October 10, 2007.
3. Anoop Agrawal, Indian Rupee Rises as Stocks at Record Lure More Global Funds,
www.bloomberg.com, October 10, 2007.
4. Rupee Hits 9-1/2 Yr High, Stocks Support, www.livemit.com, October 10, 2007.
5. Rupee Gains on Buoyant Local Bourses, www.myiris.com, October 9, 2007.
6. Shobha Kannan, Strong Re, Overpricing Likely to Hurt Inbound Tourism,
www.thehindubusinessline.com, October 9, 2007.
7. Govt Steps to Counter Rupee Appreciation, www.tradeindia.com, October 8, 2007.
8. Deepak Bansal, Appreciating INR: Industry Should Charge the Consumer Less,
www.merinews.com, October 7, 2007.
9. Hina Mahgul Rind, Rupee Stands Firm against Dollar, www.thenews.com, October 7,
2007.
10. Gayatri Nayak, Dollar Inflows Put Govt in a Bind,
www.economictimes.indiatimes.com, October 6, 2007.
11. RBI Intervention Pulls Re Down From 9-Yr High,
www.economictimes.indiatimes.com, October 6, 2007.
12. India Wont Miss $60-B Software Export Target,
www.economictimes.indiatimes.com, October 6, 2007.
13. Inflation Halts 5-Week Fall, Rises to 3.42%, www.economictimes.indiatimes.com,
October 6, 2007.
14. Tackling U.S. Sub-prime Crisis in India, www.hindu.com, October 6, 2007.
15. Rupee Gallops on Massive Capital Inflows, www.myiris.com, October 5, 2007.
16. TB Kapali, Rupee Appreciation Upsets Export Arithmetic,
www.thehindubusinessline.com, October 4, 2007.
17. Firms Look at Ways to Control Effects of Re Appreciation,
www.economictimes.indiatimes.com, October 4, 2007.
18. Panel Outlines Rupee Rise Solutions, www.economictimes.indiatimes.com, October
4, 2007.
19. Managing the Rupee Rise on the Front Foot, www.economictimes.indiatimes.com,
October 4, 2007.
20. US Dollar Ends Sharply Cheaper against Rupee, www.outlookindia.com, October 4,
2007.
21. Priya Ranjan Dash, Rupee Appreciation weakens export, www.dnaindia.com, October
3, 2007.
22. BPOs to Bear Brunt of Re Appreciation, www.economictimes.indiatimes.com,
October 3, 2007.
23. India: Rupee Appreciation Unable to Stem MSME Export, www.fibre2fashion.com,
October 2, 2007.
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21
24. India: Textile Industry Must Cope with Rupee Appreciation CITI,
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25. Exporters Seek Government Intervention on Rupee Rise, www.newspstindia.com,
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www.thehindubusinessline.com, October 1, 2007.
27. Prabhakar Sinha, Stronger Rupee Saves You from Jitters of Global Gold Price Rise,
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28. Anil Varma, Indias Rupee Heads for Biggest Monthly Advance Since April,
www.bloomberg.com, September 28, 2007.
29. Rupee Appreciation a Temporary Phenomenon: Elangovan,
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30. Volume Growth Positive for IT But Re Rise to Curb Margins,
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28, 2007.
32. Rapid Rupee Appreciation is a Matter of Serious Concern: FM,
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33. Thats It, They Just Cant Agree! www.economictimes.indiatimes.com, September 27,
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34. Coffee, Tea Exporters Feeling Rupee Rise Heat, www.livemint.com, September 27,
2007.
35. Deepshikha Monga & Gaurie Mishra, Rising Re Pulls Down Stocks of US-Listed
Indian IT, BPO Cos, www.economictimes.indiatimes.com, September 26, 2007.
36. Re Rise Threatens Existence of Punjab Inds, www.economictimes.indiatimes.com,
September 23, 2007.
37. Shubhra Tandon, Re Appreciation a Boon for Outbound Tourism,
www.thehindubusinessline.com, September 22, 2007.
38. IT Faces Brunt of Rupee Appreciation, www.econmictimes.indiatimes.com, September
21, 2007.
39. Steps Soon to Address Rupee Appreciation: Kamal Nath, www.andhracafe.com,
September 20, 2007.
40. Gary Singh, RBI has been Struggling to Work out a Way, www.nriinternet.com,
September 3, 2007.
41. Sandeep V. Arora, Where the Indian Rupee is Heading to, www.nriinternet.com,
Setember 1, 2007.
42. Rapid Rupee Appreciation a Challenge, Says Infosys CEO, www.hindu.com, August
30, 2007.
43. Sanjeev Choudhary, Rise in Rupee, Sluggish Sales Take Toll on Apparel Exports to
US, www.economictimes.indiatimes.com, August 27, 2007.
44. Kamran Sulaimani, IT Firms to Look within to Tackle Re Rise,
www.economictimes.indiatimes.com, August 10, 2007.
45. Deepshikha Sikarwar, Ratna Bhushan & Ashish Agarwal, Industry Must Show Import
Gains on Rising Re, www.economictimes.indiatimes.com, August 3, 2007.
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46. Rupee Appreciation Dents Export Growth Sharply in June,
www.thehindubusinessline.com, August 2, 2007.
47. Mahendra Kumar Singh, Strong Re May Shave off USD 13b Exports,
www.timesofindiaindiatimes.com, July 26, 2007.
48. S. Venkitaramanan, Appreciating the Causes and Effects of Rupee Appreciation,
www.thehindubusinessline.com, July 23, 2007.
49. Mitu Jayashankar, No Model Can Sustain 9% Re Rise,
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50. Ratna Ganguli, Exports Sops Elude Herbal Products,
www.economictimes.indiatimes.com, July 17, 2007.
51. K A Badarinath, Moderating the Appreciation in Re,
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52. Rajeev Malik, Indias Handling of Rupee Remains a Riddle, www.rediff.com, July 14,
2007.
53. Rupee Appreciation to Result $15 bn Fall in Exports in 2007-08,
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