One comment which has made some excellent response over social network in India was given by Gaurav kapoor. He addressed to westerners "You just sold your house and car and buy small city or airoplane in India." The comment might look funny to twitter community but certainly is a area of immense concern for the people India.
Now onward if someone will ask any student from prestigious Javaharlal Neharu Delhi university, who are studying economics, as what they would like to be after few years? The answer would be simple "That we want to be another Ben Bernanke " The world has certainly taken fear from Bernanke's statement which was released a few months ago that "Federal Reserve bank of America will reduce bond buying from 85 billion dollar a month to 60 million dollar a month".
The impact of Bernanke's statement was so huge that value of currencies of developing nation reduced by 15 to 20 percent. In 2008 when America decided to flow lot money in world market to reduce the unemployment and to boost the economy, they began purchasing lot of bonds from home. These bonds in return flowed lot of money in the market which boosted the economy. USA recovered from so called as recession and now Federal reserve thought that the money which was floated in market during 2008 should have to reduce in a time period.
So they decided to take back the money and to reduce the bond purchases. How much exact value of bond purchase reduction will happen is yet to be decided. The decision might come in the month of September, until that time it's confirm that all the currency except dollar will steeply fall.
In India one always takes 48 rupee as exchange rate for a dollar. From last fifteen year or so this rate was so constant that some software which converts rupee to dollar used to take constant 48 as default value. However, in just few months rupee has reduced to near 69 rupee a dollar.
At the same time fiscal deficit is huge in India this is because of large scale subsidies and money spent through various skims such as food security bills and health bills. The import bill rise, mainly due to oil purchase is causing tensions among current account deficit re-constructors.
The possibility of Syria war has a mixed response on currency as USA will have to bring up more dollar in economy to support war which will ease out some pressure over other currencies. If it would have been other country than Syria, then the currencies of developing countries might have gone up but since oil import of all the nations is dependent on Syria the currency value reduction would steep up.
What we need to have is a patience and let Federal bank announce its exact price of bond reduction. The export of India has risen in last couple of months, at the same time FDI reforms have placed India on a high credibility in spite of huge pressure. We have to just wait and need to see the proceeding, without doing unnecessary things. And By the March of next month we will be back on track.
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