Foreign currency convertible bonds and indian rupee essay

All accounts are now kept in terms of rupees and paise. Fall in exports and rise in imports adversely affects balance of payments on current account. By making the RBI an autonomous organisation it will be possible to strengthen its ability to focus on achieving an inflation target The RBI has to fix an acceptable rate of inflation consistent with the IMF directive.

The move to CAC would impose a pressure on the financial system and it will be necessary for banks and non-bank financial entities to operate more efficiently to be able to meet the forces of international competition. This led to capital outflows from the emerging economies including India to the US.

Therefore, fixed exchange rate is also often called Bretton Woods System. There has been a continuous expansion of Indian Currency since independence.

For a long time the rupee is convertible on the capital account for the non-residents. The important developments as regard to the external value of rupee given on the next page: Under the Bretton Woods fixed exchange rate system, exchange rate is not determined by demand for and supply of foreign exchange but is pegged at a certain rate.

In case of redemption, cash outflow is heavy in one financial year, unlike traditional debt which has regular repayment. With an increase in globalisation of international economy, even if we do not allow CAC, cross-border integration of financial markets renders capital controls totally porous.

The conversion price is set at a premium over the current stock price, or is set by a formula based on the price at the time of redemption.

The flexible exchange rate system is also called floating exchange system.

Foreign Currency Convertible Bonds and Indian Rupee Essay Sample

Further from May FIIs started withdrawing capital from debt market and capital markets as a result of which demand for US dollars rose for sending it for investment in the US. Besides, the foreign exchange inflows in various forms such as those resulting from rising exports, portfolio investment by FIIs Foreign Institutional Investorsforeign direct investment FDI not only causes appreciation of exchange rate of the domestic currency but also leads to the increase in money supply in the economy and therefore inflationary situation in the country.

But in the mid seventies Bretton Woods system of fixed exchange rate system in which US dollar played a key role collapsed as the USA could not keep constant the price of US dollar in terms of gold. To start with old coins remained in circulation along with new coins, but with effect from January 1, old coins ceased to be legal tender.

Originally, the Reserve Bank of India Act provided for the proportional reserve system of note issue. On the other hand, with a fixed rate exchange system if a country raises the value of its currency in terms of foreign currency, it is called revaluation.

But, there is also the danger of over-issue and inflation under such a purely managed system. The world is becoming a global village. The lending rate controls have already been abolished for cooperatives and regional rural banks—and there have been no adverse effects; and a similar lifting of controls for commercial banks would not be detrimental.

It gives the investor much of the upside of investment in equity and the debt element protects the downside. Up to JulyIndian rupee was an inconvertible currency. Meaning of FCCBs 2.

The cost ultimately dependent on share price development. But, whatever be the exchange rate policy for credibility the broad parameters of the policy need to be clearly spelt out. So is the German mark, English pound and Japanese yen. System of Notes Issue: The chief merit of this system is that it is perfectly elastic; supply can be increased up to any limit.

Get Full Essay Get access to this section to get all help you need with your essay and educational issues. This appreciation of rupee was driven by foreign exchange inflows partly by rising software exports but more importantly inflows by FIIs coming in large quantity to take advantage of the stock market boom in India.Short Essay on the Present Currency System in India Lalit Advertisements: The present currency system in India (i.e., after World War II) is managed by the Reserve Bank of India and is based on inconvertible paper currency system.

Sincein a phased manner, all exchange restrictions have been removed and Indian rupee has been. ESSAY SAMPLE written strictly according to your requirements The Impact of INR depreciation on the Foreign Currency Convertible Bonds (FCCBs) issued by Indian Corporates A convertible bond is a type of corporate bond In this paper we are going to examine the cause and the impact of rupee depreciation web company business plan the Indian.

Foreign Currency Convertible Bonds and Indian Rupee Essay Sample. The Impact of INR depreciation on the Foreign Currency Convertible Bonds (FCCBs) issued by Indian Corporates A convertible bond is a type of corporate bond that the holder can convert, within maturity, into a specified number of shares of common stock.

Lisa Mary Thomson, ET Bureau A foreign currency convertible bond (FCCB) is a type of corporate bond issued by an Indian listed company in an overseas market and hence, in a currency different from that of the issuer. The highlight of the FCCB, however, is the option of converting the bonds into equity at a price determined at the time the bond.

Foreign Currency Convertible Bonds (FCCBs) | Bonds | Company Management. A FCCB is issued as a bond by an Indian company is expressed in foreign currency and the principal and interest too are payable in foreign currency.

Essay on Currency Convertibility | Foreign Exchange | Economics

Any depreciation in rupee against the designated foreign currency may make the interest and principal. Essay on Currency Convertibility | Foreign Exchange | Economics.

it is called a partially convertible currency. Up to JulyIndian rupee was an inconvertible currency. The joint-stock companies should be allowed to issue foreign currency denominated bonds, provide easier access for GDRs (Global Depository Receipts) .

Foreign currency convertible bonds and indian rupee essay
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