Indo US Relations

[GaudaNaresh]

outcome depends on $ outflow, one of the scenarios goes like this:

if $ outflow increases, USD conversion rate to INR increases,
importers will be paying more in INR to get their goods shipped from outside,
since the demand for INR increases, RBI will have to print more currency,
once more INR is released into market, price of goods also rises irrespective of whether they are imported from U.S or not.

one may get goods imported from US for cheap, but will be paying more for all other goods in general.

decision to apply zero tarrifs on electronic goods imports in vajpayee gormint, had killed our domestic electronics manufacturing. which is recovering now after such a long gap.

Sorry to ask but what does this mean ? does INR appreciate or depreciate wrt to USD ??

 

[ezsasa]

Sorry to ask but what does this mean ? does INR appreciate or depreciate wrt to USD ??

INR depreciates.

think of USD as a commodity, when there is less of a commodity, people pay more to purchase that commodity. in this case people will be paying more in INR to get the same USD.

 

[GaudaNaresh]

INR depreciates.

think of USD as a commodity, when there is less of a commodity, people pay more to purchase that commodity. in this case people will be paying more in INR to get the same USD.

But....this creates greater DEMAND for INR... coz now we need more INR in circulation than before....which should raise price of INR as demand raise price = most basic economic theory i know.
But then again, i am not economics guy, i am your basic bengali kaku who makes shit tons of money at work and stuffs it in bank account or buys gold/property and doesnt really do much stocks or bonds or anything (if anyone here u know of or u r one of the people in this field, i would love to learn, btw).

Btw, isnt net dollar outflow/inflow also factored by FDA ?? like ultimately, if Indian economy keeps outpacing growth of US economy, it should attract net inflow from FDI dollars....US investors dont give a rats arse except to invest in markets where return is good and at end of the day, net rate of Indian market return is 7% growth vs 2.5% growth.....

 

[Nibbler]

The first thing I would buy if tariffs are lowered are Apple stocks. With the kind of craze for iphones where even chowkidars want to have one, it would be the hottest cake in the market and the biggest beneficiary of tariff cuts.

Iphones are manufactured in the US?

If lowering tariffs on US means they reciprocate. This will be good for india.

 

[spikey360]

Iphones are manufactured in the US?

If lowering tariffs on US means they reciprocate. This will be good for india.

They're not made in the US, but the royalty (payment in lieu of IP) goes to the US.
Now, if you are exporting IP, obviously, the tariff on the IP will also be present.
If tariff is lowered, so will the cost of the good. It may result in smaller margins, but obviously greater volumes. So, a win win scenario for shareholders.

 

[spikey360]

INR appreciation or depreciation will depend on the value added of our goods.
If our goods are down the value chain (exporting rice, not Biriyani) then Rupee keeps depreciating unless the demand in US exceeds our supply.
If our goods are high up the value chain (exporting Biriyani making machines, not Biriyani) then Rupee keeps appreciating.

 

[srev2004]

A biryani machine is a rice cooker. @spikey360 i don’t think you cook

 

[ezsasa]

But....this creates greater DEMAND for INR... coz now we need more INR in circulation than before....which should raise price of INR as demand raise price = most basic economic theory i know.
But then again, i am not economics guy, i am your basic bengali kaku who makes shit tons of money at work and stuffs it in bank account or buys gold/property and doesnt really do much stocks or bonds or anything (if anyone here u know of or u r one of the people in this field, i would love to learn, btw).

Btw, isnt net dollar outflow/inflow also factored by FDA ?? like ultimately, if Indian economy keeps outpacing growth of US economy, it should attract net inflow from FDI dollars....US investors dont give a rats arse except to invest in markets where return is good and at end of the day, net rate of Indian market return is 7% growth vs 2.5% growth.....

i am not educated in economics either, had to get into understanding these concepts because i realised MSM is lying to us and not giving us the full picture on what is happening. all this just to keep track of whether there is enough cash at any point in time for the boys to get their toys.

for the rest of answer, on a lighter note i had put to grok . and this is the reply it gave..
======
Alright, let’s tackle your questions step-by-step—why more demand for INR might not always push its price up, the basics of supply and demand, and how currency in circulation ties to GDP. I’ll keep it simple, practical, and under 500 words, perfect for a sharp Bengali kaku like you who’s more about gold and property than economic textbooks!
---
### Why Doesn’t More INR Demand Always Raise Its Price?
You nailed the basic idea: if more people want INR (demand rises), its price *should* go up—like gold when everyone’s rushing to buy it. If India’s economy grows fast, people need more INR to shop, pay workers, or build stuff, so demand climbs. In theory, that makes INR more valuable against the dollar (USD).

But here’s the catch: it’s not just demand. Supply matters too. If the Reserve Bank of India (RBI) prints more INR to keep up with growth, the extra rupees might cancel out the demand boost—too many rupees floating around can cheapen each one (think inflation). Plus, INR’s value isn’t just about what happens in India. If foreigners dump dollars into India (like via FDI), INR gets a lift. But if India’s buying more oil or gold in USD than it’s earning from exports, dollars flow out, and INR weakens. So, demand’s only part of the game—supply and global cash flows can mess with the price.

---

### Supply and Demand Basics
Picture a fish market near your place. If there’s tons of fish (high supply) but few buyers (low demand), prices drop—sellers just want to offload it. Now, if fish is scarce (low supply) and everyone’s craving macher jhol (high demand), prices shoot up. Same with INR: high demand + low supply = stronger rupee; low demand + high supply = weaker rupee. Easy, right? But unlike fish, INR’s supply is controlled by the RBI, and demand comes from both Indians and foreigners, so it’s trickier to balance.

---

### Currency in Circulation to GDP Ratio
Think of GDP as everything India makes and spends in a year—say, ₹300 lakh crore. Currency in circulation is the cash (notes and coins) people hold or use—maybe ₹30 lakh crore. The ratio (currency/GDP) is like 10% here. It shows how much physical money we need to keep the economy humming. If GDP grows fast (more business, more spending), but cash doesn’t keep up, people might scramble for INR, pushing its value up. If the RBI prints too much cash compared to GDP growth, there’s excess rupees, and inflation kicks in, weakening INR.

India’s ratio has hovered around 10-12% lately. Compare that to the US (about 8%), and you see India relies more on cash. If growth outpaces cash printing, INR could strengthen—but trade deficits or dollar outflows can still drag it down.

---

### Wrapping It Up
So, more INR demand *could* raise its price, but only if supply stays tight and dollars keep flowing in. Supply-demand is simple: scarce stuff costs more, plentiful stuff costs less. And the currency-to-GDP ratio? It’s just a clue about how much cash fuels India’s hustle. Growth helps, but INR’s fate isn’t just India’s call—it’s a global tug-of-war. Thoughts? Want more on this or your gold stash?

 

[mcpo117]

As long as the tariffs are not cut for food products in order to protect the farmers, we should be good. There is no way that US car & bike companies can compete with Indian cars and steel companies.

Trump is specifically targeting our agricultural sector. If Modi bend over, this might hurt our farmers. it's a very real possibility btw.

 

[ArjunMK1A]

Trump is specifically targeting our agricultural sector. If Modi bend over, this might hurt our farmers. it's a very real possibility btw.

Indian farming is already inefficient. Yes, if we allow free access, then it will collapse. And the big problem is we have some 20-25 crore working in that sector alone. So how can we ensure their survival.

But on the plus side, this may leads to consolidation of farm lands to much bigger sizes and it will controlled by corporates, cooperatives.

 

[Nibbler]

Trump is specifically targeting our agricultural sector. If Modi bend over, this might hurt our farmers. it's a very real possibility btw.

I dont think so. I think USA actually wants deal and knows what it is reasonable

 

[eastern_bhartiya]

But....this creates greater DEMAND for INR... coz now we need more INR in circulation than before....which should raise price of INR as demand raise price = most basic economic theory i know.
But then again, i am not economics guy, i am your basic bengali kaku who makes shit tons of money at work and stuffs it in bank account or buys gold/property and doesnt really do much stocks or bonds or anything (if anyone here u know of or u r one of the people in this field, i would love to learn, btw).

Btw, isnt net dollar outflow/inflow also factored by FDA ?? like ultimately, if Indian economy keeps outpacing growth of US economy, it should attract net inflow from FDI dollars....US investors dont give a rats arse except to invest in markets where return is good and at end of the day, net rate of Indian market return is 7% growth vs 2.5% growth.....

value of INR is depends on alot of factors, some of which are dependent on each other as well. weaker INR is good if we can increase our exports, without that it will only lead to inflation on fuel and imported stuff.

FDI in India has been low for while now, cause usd gained a lot during covid. outpacing growth isn't that important, if govt spends a lot on infra and other project, it still creates growth in economy due to activity, but it doesn't do anything in currency department. that 7% growth rate has a huge boost from govt spending.

Our imports remain higher than exports, in that case more INR supply will just lead to inflation

 

[Azaad]

US demands India stop purchase of Russian weapons, lower tariffs & prevent de-dollarisation

US Secretary of Commerce Howard Lutnick Friday urged New Delhi to reduce its reliance on Russian defence platforms and hit out at BRICS for its de-dollarisation efforts.

theprint.in

 

[ezsasa]

US demands India stop purchase of Russian weapons, lower tariffs & prevent de-dollarisation

US Secretary of Commerce Howard Lutnick Friday urged New Delhi to reduce its reliance on Russian defence platforms and hit out at BRICS for its de-dollarisation efforts.

theprint.in

at India today conclave..
giving cues to the very MSM organisation which is part of the groups working against modi and trump

that's how clueless trump's team is, as of now.

 

[Azaad]

at India today conclave..
giving cues to the very MSM organisation which is part of the groups working against modi and trump

that's how clueless trump's team is, as of now.

Didn't get you . Could you elaborate your point ?

 

[ezsasa]

Didn't get you . Could you elaborate your point ?

India today's editorial line on murican and global geopolitics comes from CNN/BBC/reuters/npr types who are anti-trump. and yet he is on India today talking about things that are supposedly pain points in trade negotiations , giving cues to the very people who want modi and trump to fail.

 

[Azaad]

India today's editorial line on murican and global geopolitics comes from CNN/BBC/reuters/npr types who are anti-trump. and yet he is on India today talking about things that are supposedly pain points in trade negotiations , giving cues to the very people who want modi and trump to fail.

Oh I never he was in India.

 

[ezsasa]

Oh I never he was in India.

nope, video interview at India today conclave.


View: https://youtu.be/FmbVPaJh3YA

 

[Blademaster]

Trump is specifically targeting our agricultural sector. If Modi bend over, this might hurt our farmers. it's a very real possibility btw.

Not gonna happen. It’s political suicide and Modi knows this. He’s strong enough to tell Trump off. Trump will back down since he got some wins. He’s a deal maker not a fanatic.

 

[Blademaster]

Indian farming is already inefficient. Yes, if we allow free access, then it will collapse. And the big problem is we have some 20-25 crore working in that sector alone. So how can we ensure their survival.

But on the plus side, this may leads to consolidation of farm lands to much bigger sizes and it will controlled by corporates, cooperatives.

Lol. Won’t happen. India inefficiences has to do with basic structure of economy and social structure of India. You would need to change culture overnight. Not gonna happen. Only way for this to happen is to open the industrial sector even further and encourage more people to abandon farming way of life like the Chinese did.