Well on seeing the topic, ppl might ask,Are u an economist or for that matter someone who has got any expertise in Finance? My answer to that is A Big "NO", I am neither of them. Then what makes me write on these topics? Well its simply the interest and the love for this field.

Before gettin into the topic, a bit of History on the INR. Before 1991 when we we had our License Permit Raj and other rigid policies which prevented International Investment and made sure that Indian Companies also never grew to match the International Standards, the Rupee was not very attractively priced against the dollar.

Cometh 1991 and the economic crisis ( which came as a result of decades of poor governance and policies which were suited for the Industrailists and the politicians to make money), cometh Manmohan Singh, who liberalized the Indian Economy, devalued the Rupee to save the Country. Thats the end of Part 1

Part 2 had Indian companies ( IT/ITES in particular) exploting the arbitration advantage to its maximum and minting money like anything. Indian Companies started showing its mettle. TATA group did a historical buy out of Corus, bought over Tetley and so did the Aditya Birla Group, they expanded into different continents and India Inc started attracting huge Foreign Inflows. Sensex zipped and zoomed and the strength of Indian Economy coupled with the weakness in the US meant that Rupee started appreciating against the dollar.

So Part 3 must have been Indian Rupee strengthening further against the dollar. But it is not happening. Rupee is weakening now. But how is it happening, that too at a stage when Crude is rising and US is also in a recession. There lies the greatness of our politicians.

What is that they have done? They invented P-Notes, an arrangement by which someone can invest( ???) in India without giving their Identity. Money which came through the P-Note route was Hot Money and this huge Influx of Dollars meant that the demand for Rupee went up and Rupee appreciated. (Software Companies cried Foul. )Now the moment Disaster Struck US this Hot Money vanished and so did the demand for Rupee. Had they encouraged more long term Money like that of CALPERS and allowed EPF to invest into Share markets, 2 things would have happened
1. Sensex would not have gone into such a big downward spiral and 2. Rupee would not have fallen this much now.

Why is Strong Rupee Important?

A strong Rupee means that we spend less for Crude. Ex: Let us assume that Crude is trading at 140 Dollars US, right now, and Rupee is trading at 40 against the USD,it means that government will spend Rs 140 * 40 per barrell. Now assume that the Rupee is at 43 against the dollar and now we spend 140 * 43 per barrell. Now there it is for all to see.India imports 70% of its Crude Requirements and imagine the amount of saving that a strong Rupee will bring us.

Also Crude is the basic material for all the operations, hence high Crude leads to a overall high cost of Living. So howmuch ever u make through ur lucrative software job or any job u will end up shelling far more to sustain the standard of living.

Now, wont the Software companies and the other export oriented companies be affected? is a question that will arise in the minds of the readers. My answer to that is, A rising currency will weed out all the Incompetent players who primarily rely only on the arbitration to make profits.A strong currency will only strengthen the competent and the efficient players. A Strong Currency is the Need of the Hour, from an econmical point of view.