How the American Dollar Impacts India
Fin 242
Financial Management
Term Paper
How the American dollar ($) impacts India, a general report
By
Samarth Bahl
Since, 1991 when the then Indian government was run by the Indian National Congress (INC), the political party instituted a plan to implement economic reforms, short and long term to bring the country out of its quagmire, to this end the value of the dollar has played a key role in the economic fortunes of India. This is due to the fact that the dollar has been the world 's most dominant currency in the past 65 years. The major currencies in the market today are always measured against the dollar. For example, the value of the Euro, its strengthening or weakening is measured relative to the American dollar. The reason for the dollar to be such a strong market force in the foreign exchange market is due to its reserve currency status, which makes it the most widely distributed and used currency. That is another reason why some of the other major existing and potentially strong currencies are pegged against the dollar. Of course, the value of the dollar is not fixed it depends on various factors. Trade deficit, budget deficit, national debt, foreign investment returns are some of the major factors that play a critical role in determining the value on a continuing, daily basis. When economic reforms were introduced in India, they themselves did not realize that in the next decade the rate of economic growth in their own backyard will be unprecedented due to the untapped potential of its substantial middle class in terms of sheer volume. The economists in the country eventually gained on to the reality that the potential of the consumers was the stepping stone to India 's economic freedom. The major factors that have worked in favor of the country are that the labor force is highly educated (and fluent in English) and skilled, yet is still cheap comparatively to the industrialized nations. So much so, that the multinational companies have
Financial Management
Term Paper
How the American dollar ($) impacts India, a general report
By
Samarth Bahl
Since, 1991 when the then Indian government was run by the Indian National Congress (INC), the political party instituted a plan to implement economic reforms, short and long term to bring the country out of its quagmire, to this end the value of the dollar has played a key role in the economic fortunes of India. This is due to the fact that the dollar has been the world 's most dominant currency in the past 65 years. The major currencies in the market today are always measured against the dollar. For example, the value of the Euro, its strengthening or weakening is measured relative to the American dollar. The reason for the dollar to be such a strong market force in the foreign exchange market is due to its reserve currency status, which makes it the most widely distributed and used currency. That is another reason why some of the other major existing and potentially strong currencies are pegged against the dollar. Of course, the value of the dollar is not fixed it depends on various factors. Trade deficit, budget deficit, national debt, foreign investment returns are some of the major factors that play a critical role in determining the value on a continuing, daily basis. When economic reforms were introduced in India, they themselves did not realize that in the next decade the rate of economic growth in their own backyard will be unprecedented due to the untapped potential of its substantial middle class in terms of sheer volume. The economists in the country eventually gained on to the reality that the potential of the consumers was the stepping stone to India 's economic freedom. The major factors that have worked in favor of the country are that the labor force is highly educated (and fluent in English) and skilled, yet is still cheap comparatively to the industrialized nations. So much so, that the multinational companies have
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