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Currency Conundrum: Is the Strong rupee Good or Bad for India?: India intimacy@Wharton (http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4212) Currency Conundrum: Is the Strong Rupee Good or Bad for India? Published : July 26, 2007 in India Knowledge@Wharton History has been unkind to Canute. The 10th century king of England was so tired of his fawning courtiers that he took them to the shore and commanded the waves to roll back. It was to be a demonstration of the limitation of his powers. But Canute in hot perception is the man who tried to turn the tide and failed. Today, Indias finance minister P. Chidambaram and Y.V. Reddy, the governor of the Reserve Bank of India (RBI), Indias central bank, exhibit Canutes predicament. In the public mind, they seem to be trying to stamp out an inexorable inflow of dollars and its consequence -- an appreciating currency. Once traded at 47 or 48, the rupee now hovers at 40 to the dollar. Observers abuse it the fastest appreciation of the Indian currency in ternary decades. Is the rising rupee good or bad for India? What fix will it have on the global competitiveness of Indian firms? Should the RBI or the Finance ministry intervene?

Responding to these questions and more, experts at Wharton and elsewhere say that the rupees rise is the result of Indias growing qualification to attract global capital. While this creates problems for some companies that earn near of their revenues in dollars -- including IT giants such as Wipro, Infosys and TCS -- it also creates opportunities for Indian firms by making it less expensive for them to acquire overseas assets. In addition, a strong rupee is good for the Indian consumer. It would be unwise for the government to intervene to force down the rupees value, they note. Whats Driving the Rise? Dollars are pouring into India. Net investments by foreign institutional investors (FIIs) were $10.16 billion during January-June 2007. This is more than the $8 billion... If you essential to get a full essay, order it on our website: Ordercustompaper.com

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