Our economists are worried for the continuous fall in the exchange value of Rupee. This fall is due to lack of demand for it in the Forex Market. To understand what I am going to write here I suggest to my dear readers that they go through two sites on the web. Because of certain advantages, this Forex Market is going to ride over the stock and derivatives market in the near future. To put it in simple terms Forex business is a business of buying and selling of currencies.

In 1974 Forex Market they created at London because, in 1971 Nixon administration disconnected US Dollar from the gold price and made it a fiat currency, international finance lobbies had no other choice but to do it. and that was to help ease difficulties in the balance of payment as fiat Dollar had begun to show certain weakness. At Forex they buy one currency by giving other currency. Actually this deal comes under term, money laundering, however, they allow it. We all know that many activities of market are outlawed but they nevertheless continue because that is the need of human society. Prostitution, gambling, smuggling, black money are other necessary evils those we tolerate. They all have their advantages and for those advantages they are allowed clandestinely. Dealing in currency is one such necessary evil that our economists have accepted and we see that it is proving to be a solution for our troubles with international currency. If we understand the working of this market; need for any international currency becomes superfluous. Through this Forex Market every currency becomes an International currency; so long as it is in demand.

In this market, as you may have gone through the literature on the web sites I recommend, we see that two rules apply for the purchase of a currency. Demand and supply are those two rules. Currency in demand improves its value and currency not in demand gets devalued. Devaluation of Rupee we see is primarily due to lack of demand in the Forex Market. In earlier times (fiat) value of a currency was decided by the nation to which that currency represented. Over the period, that changed on popular demand and now the (fiat) value of any currency only this Forex Market decides. To keep the value of currency at desired level we see that two things are important. One is, exports of the country remains steady and continues to increase. Other thing is, by artificial demand a currency maintained at high level. This artificial demand created by big operators at the Forex Market. They keep buying a currency creating an artificial demand and that results in value improvement for that currency. You cannot buy a currency by spending the same currency and for that some other currency they use to buy the desired currency this is Indirect method. To begin, you buy that intermediate currency by spending your currency or black money in Rupee and then use that intermediate currency to buyback your desired currency that means Rupee; this newly purchased Rupee is white money! Many operators at the Forex Market have the certain amount of skill required to play this. Interesting part is that you need not do it from India but from anywhere else suitable to you to avoid Reserve Bank nuisance. Any foreign depository can help you. I suggest that Hinduja brothers should come forward and help Rupee, they have all the contacts with Swiss Bank account holders from India. Through this two aims they attend; first, they make big profit as the Rupee they get back is stronger and white, second, a satisfaction that they have done some patriotic act.

At present Dollar has been maintained at the level by this artificial method. To understand this, you may read my article on my other blog. Our financial expert MMS had done this some time back but as his bosses (Washington) scolded, he stopped it. Fed chairman Ben Bernanke uses the counterfeit Dollar to pump up US Dollar. MMS tried but could not continue for reason I gave. Here we find that black money can come handy to save Rupee. We have a big share of this money which is either stocked up at the Swiss Banks or any other place. If this fund they use to purchase back, Rupee as mentioned (Indirect method) we can pump up value of our currency same as they do for Dollar. Interesting part is that, as they do it, Rupee will become stronger, an additional advantage to them and so I feel all those such as Niira Radia, Shard Pawar, Chidambaram and many more, should come forward and help save our Rupee. Some experts also suggest that a large amount of black money will gradually become white in the process. 

Other legitimate method is, to improve exports. However, we are not having the dynamism required, in our exporters and so that method will not help improve value of Rupee in the near future.

For more curious readers they may log on:

http://www.fxcm.co.uk/demo-account

http://www.fxcm.co.uk/open-account

http://kothareashok.noahblog.com/2012/02/25/ben-bernanke-strategy-2/

You may contact me on my Email ID given below, 

ashokkothare@yahoo.co.in 

ashokkothare@gmail.com 

You are, invited to visit my other blogs if interested. 

Ashok Kothare for stories

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