The Biggest Joke spread in Media - Rupee Closer to Replacing Dollar!!

 18^th March 2023

The Biggest Joke spread in Media - Rupee Closer to Replacing Dollar!!

Dear Fellow Travelers,

Namaste! Thanks a ton for appreciating our post our post on Three Monkeys and Fed rate. Now, the message are being spread that Indian rupee will replace the dollar in coming time. The message says there are 18 countries who have agreed to trade in Indian rupees instead of dollar. Incidentally, today’s date is also 18^th. The readers who don’t understand the foreign trade got happy with the achievement of the government. This is a joke. Let me explain to you with the two solid realities of the USA and the DOLLAR at this juncture of the time.

How the RUPEE and OTHER CURRENCY RATES are determined as of now?

It is quite possible that 18 countries will trade in RUPEE and their respective currencies. But the exchange rate will be determined keeping dollar rates of the respective currencies as a reference rate and the conversion will take place.

Say we are doing Ruble – Rupee trade. Now the conversion is decided like this.

1 Russian Ruble is equal to USD 0.013  

1 Rupee is equal to USD 0.012.

So, 1 Russian ruble is equal to Rs.1.07. (0.013/0.012).

If you check the google – you will find the above answer.

In other words – without DOLLAR – any currency can’t be VALUED.

So, those who are celebrating RUPEE trade are misguided.

In share market those who understand the DERIVATIVES – can see that RUBLE – RUPEE trade is derivative of the USD- Ruble rate and nothing more. 

Size of USA economy compared to India: -

Now, second solid reason.

As per www.cleartax.in – the USA economy is USD 25 trillion economy and Indian economy is USD 3.5 trillion in 2023.

Now if USA grows at just is about 2.5% and Indian GPD growth rate is about 6-7% as per various estimates.

If the USA grows at 2.5% - it will add USD 625 billion in the economy. If India grows at 7% - it will add USD 25 billion more. In absolute terms USA growth is 24 times more than Indian growth.

Indian economy size is just 14% of the USA economy. We can’t beat the USA in coming 10-15 years also in terms of the economy size. When we can’t beat them on Economy front – we can’t beat them in currency supremacy for sure.

So, don’t get misguided by the claim of rupee replacing dollar.

What about the countries who have agreed to accept the RUPEES?

As per the list – they are Russia / Singapore / Sri Lanka / Bostwana / Fiji / Germany / Guyana / Israel / Kenya / Malaysia / Mauritius / Myanmar / New Zealand / Oman / Seychells / Uganda / UK.

If you check the CLEARTAX side – except GERMANY all the countries GPD is below Indian GPD. Except UK, all the economy are much smaller compared to India.

So, India has a long way to go to establish RUPEES as the chosen currency.

What NEXT?

As an Indian citizen I too wish we reach to the top but FACTS are FACTS and we have to accept the same.

FANTASTIC returns will come automatically when you invest based on FACTS and not on FANTASY.

Wish you all the best.

Follow me on Twitter @hiteshmparikh /  WhatsApp - +91-9869425399.

Learn a Lesson. Live with Passion & Invest with Reason.

 

Hitesh Parikh.