LET US INTERNATIONALISE INDIAN RUPEE

Exchange rate in 1947 was 1 rupee = 1 US Dollar. Since then though it never gone to that level, both remained in close range.  However since the devaluation of Indian rupee in 1992 it kept falling continuously. Today's exchange rate is 1 US$ = Rs 81.96 Now, Indian economy is fairly doing well but our rupee is not picking up at that level. On the other hand, while US economy is not making any quantum leap the exchange rates of USD is keep mounting versus almost all other currencies. It is because of its demands world over. Currency exchange rate is decided like the price of essential commodities under demand and supply theory.

If Rupee can reach more heights that will reduce the dependency on the dollar considerably and on the other hand it will provide us better bargaining power.  When this can reduce the cost of export and bring in more earning from international trade. Since this can appreciate the demand of rupee there will be less risk of purchase price of goods. It can also eliminate the risk of currency shortage and price fluctuations. It may also be seen that China and USA are our top trading partners. 

While most of the impacts by the internationalisation of the rupee can be positive, some negative may also surface. Increased demand will appreciate the currency value. Transaction costs of individuals dealing with India may come down. Exchange rate may remain fairly stable. When this can create economic relations with other countries and may promote deplomatic relations too. It may also create a challenge for our government in meeting the demand of rupee within the country alongwith the requirements in the international arena. When the import cost will be determined by high cost and stable rupee it may affect the balance of trade with some countries.

In order to commence with the internationalisation of Indian rupee we may open some international trading houses with large godowns at different states of India where sea port and airport facilities are available. Initially we may focus in Asian countries where any raw materials and finished products are available for which we can find/create demand in the the international market and within the country.

K V George