Dollar versus Indian Rupee

As it is always a race in currency exchange market for dollar versus repeats every Indian wish that why can't be a one rupee is equal to one dollar.

This is the question quite similar to why can't we just print money and pay all the debt. there are some pros and cons to the situation but let's see what happens if overnight or in very short period of time dollar equates to rupees .first of all the high value of currency does not mean the economy of the country is stronger. if that was the case then Bangladesh would have had a stronger economy than Japan because one Bangladeshi taka is equal to 1.4 yen.

Now the pros of the situation buying goods will be cheaper for Indians in international market because this will make imports cheaper which is quite good for the developing country. Buying luxury is good will be very easy for Indians simple example , iPhone 8 will cost only 850 rupees which is quite cheaper than the current market rates as imports are cheaper then petrol price will be cheaper resulting in reducing the transportation cost of the goods around the country.

This looks like a quite good scenario but this will not last long for this situation because other side of the story is completely different now cons of the story the exports will be quite expensive because Indian products will be expensive compared to other competing nations as the Indian export is booming quite a lot since recent years. if it's expensive why any country would buy things from us if they can buy it from the other competitors with lower cost no foreign investment the number one reason for the foreign investment in India ,the cheaper labor cost foreign companies will not be investing in India if they can invest in other country for cheaper price investment in IT sector and service sector which contributes in huge amount of Indian economy will begone now has rupee is equivalent to dollar why any company would pay to an employee seventy five thousand rupees per month if they can hire some one outside who will do the same work for$3,000 or rupees. Also people wouldn't pay four thousand rupees per month to a maid instead they will buy a nice thousand dollar vacuum cleaner so eventually people will lose jobs which will increase unemployment plus the investment is not coming to a country resulting into a complete economic slowdown the outsourcing of jobs in India will be stopped also the companies which are present in India we start to move out as it will be not profitable for them similar situation happened in2008 when dollar was quite strong around40 the imports were good but the BPO sector and the IT sector suffered a lot the situation of one rupee equal to one dollar it just not affordable for growing or developing country now someone will say what if we don't need foreign investment we use all the Swadeshi stuff well that will not work either we have done that till 1990 and the economic growth happened when we let go that idea after1990 if we boycott foreign products then others is also boycott our products which will reduce exports because we reduce imports not beneficial it is called protectionism which is completely opposed to free trade also less exports mean less foreign reserves for importsJapan also suffered a huge economic loss when their currency was overvalued in1986.

China has the fixed rate system in which government decides the value of currency and they devalue their currency against the dollar all the time just to capitalize on the export market in the beginning of 2016 China has done the same. Our finance minister and RBI governor is not worried about the falling rupee but they are worried about the fluctuations in the market. The stabilization of Indian rupee is important thing whether it might be on 50 60 or 70 today if rupee is 60 and tomorrow it is 70 it's too much fluctuation in short time and not good for economy as we have adopted floating rate system since 1975. the finance minister and the RBI governor and government cannot decide the value of currency it is the market supply and the demand of rupee decides the value but the finance minister and RBI governor do have control over the policies and maintaining the forints reserves of the country through this they try to maintain the value of rupee constant by controlling the inflation rate so that the currency does not get completely depreciated as an Indian. we do want our currency to be high valued but at what cost the cost is too much and the main reason is as I mentioned earlier. the cost of the currency is not the scale which determines the economy of the country it is just a different way to measure value a mile is 1.6 kilometer but if you run16 kilometer or 10 miles the distance is the same eventually it will happen with the growing economic activities manufacturing and production at much more scale but no sooner than four to five decades or maybe more.