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1 USD = 84.03 INR We are developing, just backwards! Thanks to you know who.
Depending upon a nation's current account deficit (CAD) as a percentage of GDP is the real important metric.
If the deficit is less than 2%, going weaker against dollar is good, as that can help to close that CAD gap.
If the surplus is 5% or more, your exports are somewhat necessary and having a weaker or stronger currency doesn't affect you that much.
If the surplus is up to 2% of GDP, then having a weaker currency can help you grow exports.
While a weaker currency also affects a nation's energy imports, India is in a special situation where buying oil from Russia is negating the effects of a weaker rupee. So, good for a weaker currency.
Although a weaker currency can affect capital expenditure imports of advanced machinery and tooling, which can be a net negative to a manufacturing impetus. But it is good for operating manufacturing, as your exports become more attractive.
An Indian rupee between ₹86-90 is currently the sweet spot as that includes our horrendous logistics costs, and antagonistic interventions by local power players through unions and strikes. (Local power players in other rising East Asian economies like Vietnam, Thailand are simply put to rot in jail in case they try to play the same way that happens in India, without a court date).
Also, taking into account inflation rates in US and India since 2008 (when rupee was highest against dollar in recent memory), the rupee has technically appreciated against the dollar. Total compounded inflation in India since 2008 is well over 150%.
₹100 in 2006 has equal buying power of ₹332.64 at 2024 beginning. link
$100 in 2006 has equal buying power of $169 in 2024 beginning. link
Rather than going deeper into the politics, I thought I'd give a more informative response.
Yes, that's what I said in the first sentence. RBI has put in measures on individuals trading in forex arbitrage, mainly the measures being having a certain net worth or a certain amount of liquidity.
And for food reason, thousands or even lakhs of people have been routed in currency arbitrage before, many of them much smarter about it than the general populace.
Also, forex divisions of banks often don't make a profit on their currency arbitrage, and only recover it through fees and through their foreign currency deposits earning interest.
A small move by BoJ to end the era of negative interest rates or by Fed to increase rates or by ecb to continue QE can essentially wipe out lakhs and crores of your currency arbitrage balance sheet.
One of the easier way, larger Indian businesses make money is issuing debt on foreign stock exchanges, particularly in US, UK and Japan after obtaining permission from Reserve Bank and the central government to fund massive industrial projects or infrastructure building.
There's very good reasons and history backs it by many lakhs of people being burnt by it, that Reserve Bank and GoI prevent commoners from trading forex.
One way, commoners have found a way around this is the hawala exchange, which I do not recommend at ALL. Trust is easily broken, and you'll be a sacrificial goat for somebody's new Audi.
Even seasoned ones get burned more often than not.
BoJ decided to end negative interest rates, traders in US sold off massive amounts of equities, causing a stock market decline and that caused a panic, companies stopped hiring, and jobs report was a bit weaker.
Turns out, BoJ didn't increase rates by very much, and those traders could have held till September end or first Friday of October and could have booked larger profits, and in plenty of cases avoided loses.
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You probably can't, unless you can spend at least a few crores without blinking and eye.
HNIs, VHNIs trade on security assets and overseas stock assets. Storing value in dollars, euros etc.
Investment banking arms of your regular consumer oriented branches do a bit of currency arbitrage.