Full transcript of “1$ = 100₹ Soon ? Why Dollar is so powerful against Indian Rupee ? Economy explained by Ankit sir”. Click a timestamp to open the video at that moment. Need another video? Use the YouTube transcript generator.
0:00 Why is the value of rupee not equal to that of dollar ? Let us understand an example for that. Suppose there were two countries. One's name was x, one 's name was y. You gave ₹100 to both of them in the beginning saying that brother, rupee is used in my country. You keep ₹100, you keep ₹100. I told both of them to go sons and make something good with this ₹100. went to country x. He planted 100 mango trees for ₹100. y also went to the country. He also planted 100 mango trees for ₹100. Both of them did well. Still X and V are standing at equal places. But y turned out to be Teju. The next time, Bhai Saheb planted more mango trees using the seeds that he had taken out from this mango. Here the people with X started enjoying the fruits by selling and eating these mangoes. His mangoes started running out. His mangoes started growing. So technically I
0:46 only got ₹100. This brother made mangoes from mangoes and after eating these mangoes he could not even recover the price of the seeds. Y and Teju came out there. Later on, that brother started making many things from those mangoes like mango juice, mango Pana, mango pickle etc. How much stuff did he get in ₹100? Meaning that it became a big economy in itself. Because they changed 100 into 200, 200 into 400. Because ultimately they were left with only 100 out of 100 mango trees and the number of mangoes that came out from those 100 mango trees is standing in front of them as it is. So overall, Y has become a big economy. That means the values of both are not equal. This means that for the value of money to be equal, it is important to know the value of the things associated with that money.
1:34 That means, what is the value of the goods in that country with that money. On this basis, the first comparison of currencies is decided that if someone in India has ₹ 1 lakh, can he buy as many goods in ₹ 1 lakh as he can buy in America ? Or he can buy the same amount of goods for US $1 lakh. In this way the prices of both the commodities are decided. The first basis is to keep this work fixed like this. So now this difference keeps on arising between the countries that brother, I can get this much goods for my ₹1. You get only this much product for their ₹1. This means that there is a difference in the value of rupees of both of them. If this difference is managed by the goods produced in the market then it is
2:20 called floating exchange rate. Today the rupee is falling against one dollar. This means that the dollar is continuously strengthening. Meaning, people's interest in dollar is increasing and their interest in rupee is decreasing. What can be done in dollar cannot be done in rupee. The acceptance of dollar is increasing. The American economy is getting stronger. Money is growing inside America. Those who have dollars are becoming rich. This type of perception is the first impression. So this exchange rate is called floating exchange rate. OK boss. There is another type of exchange rate and that is the fixed exchange rate in which a country decides by itself that my ₹1 will be sold for this much only or I will give only ₹1 for this many dollars. The people who decide this, decide it on their own. Would you say there is such a country?
3:06 Absolutely. There is Bahrain, Hong Kong, Iraq , Saudi. These people have fixed it. But it is the same thing. Any country says that we do not want to buy your goods. Like people in India started saying, Sir, I will sell $1 for ₹1 only. So the other person will say, okay sir, then why should we invest dollars in your country in the form of FDI ? The main reason for your coming here was that we got cheap labour and cheap land at your place. Working quickly became easier. That's why we came here. Why should I invest money with you? We are going to our place. This means that economies with fixed exchange rates do not receive FDI comparatively. Countries of the world do not like to come there. This is the reason why India has changed its exchange rates repeatedly. You have devalued your currency on your own.
3:52 Without telling anybody, we have decided on our own that listen brother, consider the rupee to be weak against the dollar and bring your dollars to invest in our country. India itself devalued the rupee in 1949, 1966 and 1991. The rupee has been depreciated meaning that sir we will make this much rupees in $1. Why so? So that those who have dollars feel that India is cheap. Let's invest here. And exactly the same happened. Whenever we were stuck in times of crisis, we needed dollars. Now the big question is why do we need the dollar ? Because the dollar rules the world. Why don't you pay in rupees ? Because the other country is not getting anything else from your money. This is the same thing that I did during the bar system. For example, today you bought oil from Saudi.
4:38 Bought oil from Saudi and gave him the money saying Sir, take this, we needed oil, you take the money. Now the Saudi said, Sir, what should I do with this money ? You said that you should order iPhone from America. America said I do not accept this as Rupee. I do n't consider it a currency at all. You said we will get angry. Say it's done. You need me too. He needs me too. So I am bigger because I am a big economy. Brother, how big is this economy, brother? He's sitting at $29 trillion. We're sitting at $3.5 trillion. That is a developed economy. It has a population of 3035 crores. We are sitting with a population of 145 crores. We have so much disparity here. He has taken everything towards development. This means we stand nowhere in the competition. When I am not standing, it is his will that is prevailing. It is as per your wish. He
5:24 said, I will only take the dollar. Then Saudi told you Sir, the other person has said that he will only accept dollars. He is not taking the money. So you said what should we do? Sir, please give us the dollar. You said, brother, I don't have dollars. So sir earn dollars. So how do you earn dollars now? To earn dollars you went to America and said, listen sir, you buy our goods and pay us in dollars. So America said wow sir, wow. Why should we buy from you ? Tell me this. What are you producing here that we should buy from you? You said, Sir, look, we provide cheap labour. We have cheap service here. You can buy service from us. America said, no no sir, you are big people. You need ₹1 to be equal to $1. So why should I get service from your people ? I should not get it done from any other country.
6:10 There, people are dying to do cheap work. So why should I get it done from you only ? You said, yes friend, this is logical. Then America was explained, Sir please listen. Can do one more thing. We will do the work for you at a low price. How much will you charge to complete the work? Sir, you give us $1 for work worth $1 and we will do work worth ₹50 for you in $1. very good. Sir, you give us $1 and we will do work equivalent to ₹87 for you. Did you understand the meaning? We need dollars. There is a need so we want to give them cheap work. Only if we provide cheap work will we get the dollar. And why do we need dollars? Because we have to make payments to the world in dollars. Bought goods from all over the world. Payments have to be made for that goods. Otherwise what will happen? Hey brother, there will be a balance of payment crisis. As it happened in 1991.
6:58 You had to mortgage the gold. In this way the gold will have to be mortgaged. The country's economy will not be able to stand. When we look at the situation of Sri Lanka or Pakistan today, what happened to Sri Lanka ? He had simply run out of forex. So the oil tankers remained standing. The oil dealers are saying give us dollars and we will empty the oil. If this does n't happen then Sri Lanka will be ruined. What is the biggest problem Pakistan is facing? $ billion is outer stock out of which $9 billion is held by the Saudis just to show that they have kept it. Do n't use it because we will not pay you. So, overall the dominance of the dollar in the world happened to settle your balance of payments. You have to make payments to the world, that world is accepting only dollar in 80% of the trade. That's why you had to devalue your currency so that brother keep giving dollars. Then how does the dollar come to us? Firstly, they
7:44 pay for the service. Secondly, they order cheap goods from us here. That's why you see India trades around $118 billion with the US and has a trade surplus. They sell more goods and we give them more dollars. When the dollar comes to us, we are able to stand up against the world. And what can we do ? We tell America to come and invest in our companies. Which you call Foreign Direct Investment. Sir do FDI. Do FDI and give us the money and go away. Give me the dollars and go. So we also get FDI from America. So sir, does no other country of the world come to our place? But when 80% of the world is doing trade in dollars, then whenever they come, they bring dollars with them. So in a way, the arrival of foreigners or the arrival of foreign trade brings dollars and to keep them attracted we keep weakening the rupee.
8:30 OK boss. So I hope you guys have got clarity on the weakening of the rupee, how it started at Rs 3.30 in 1947 and how it kept on diluting and reached Rs 87.
