A Thorough Note on Why the Dollar is Higher than the Rupee

Should Indians pay a high amount for the same quality product as US citizens? What is the reason for such inflation? How does the $1 rate go up or down?

Like any other stock market, the value of a foreign currency is determined by the level of demand and supply of that currency.

• If the demand for $ goes up, its value will go up and vice versa.

• If the offer of $ goes up, its value will go down and vice versa.

Since the US Dollar’s value is always discussed in comparison to another currency, we will discuss the $ value in terms of the Indian National Rupee (INR) here.

Now, the USD value will increase if:

Demand for $ Goes Up

Many Indians decided to import goods from the USA. As we import goods from the US, we have to pay them in USD. Indians do not pay high amounts for a product like Americans. Indian products are part of the cost of the American market. 

The buying power of the Indian Rupee has risen to about three times in US dollars as long as the product is homemade, like medicine, energy, water, food, etc. Those costs are usually lower when there are imported parts, such as auto-imported electronics and fully imported cell phones. 

One of the reasons for the inflation is India’s very high inflation rate. You need to print more money to cover what more than a billion people do. That creates three times the direct rate of rupee on the dollar donation.

If the cost of printing goes down, the price will go up for the next several years. Though inflation is high in India, it is controlled. In absolute terms, Indian metros reach US wage earnings at a cost up to US ‘B’ cities. 

However, India has a small wagon in the construction industry and has no restrictions on construction. As India builds infrastructure and expands its cities, those prices will remain lower by increasing supply outside the regions where wages grow faster than the availability of housing and property.

The American Dollar is Strong Due to the American economy. They have

• Large consumption of goods

• Huge banks

• Explicit business Law 

• A large number of employees

• Huge investment firms

• Lots of home appliances

• High technology production

• Extremely strong agricultural industry

• Too much home debt

• The culture of innovation

• Heavy tax

The US’s gross domestic product (GDP) depends on the high value placed on the job and the number of resulting goods and services.

Relatively all nations have greater faith in the American Dollar. The US Treasury is issuing bonds to cover its costs, and these bonds are traded and held by overseas investors and governments, which increases the value of the US dollar.

About India

• Low to medium consumption

• The financial sector is as strong but not as large as US banks

• Not at all related to business; the rules and system leave a lot to be desired

• Lesser number of people

• There are not many investment companies

• Not many home resources

• Production is not high technology or high value

• The fragile agricultural sector is plagued by money laundering and inflation, and the debt is full

• Huge external debt

• The new design is limited but evolving

• Robbery tax

Although India has its domestic economic status, stability and confidence are very low due to:

• Low number of new designs

• Low productivity (rapid change)

• Lesser value addition (quick switch)

• Lack of infrastructure (rapid change)

We were not doing anything to add to our maximum value. India does not produce goods to supply much of the world’s demand. We have a service industry that focuses on serving first-world countries, which adds a small amount of value to our economy. The labour price arbitrage makes the estimated value of our services even lower. All this has changed suddenly and very quickly. 

Conclusion

As USD and INR prices are determined by market strength, the rupee falls like the stock market if people do not find value in our economy. When people find value in our economy, the rupee goes up.

We are still involved in the economy, which means we are building a basic economy at the grassroots level. We grow by building and making things. The US and other developed countries are in a state of a high economy, which means they are growing with innovation.

Finally, our service sector focuses on western companies. Our low-cost work adds value to innovation, products, and sales to the US economy.