Until the beginning of this year, the country had saved enough for the rainy day, because of strong capital flows in the past. However, those reserves are depleting fast. India lost nearly $85 billion of its forex reserves in the first half of the fiscal year, the second biggest depletion among major emerging market (EM) peers during the period.
India’s forex reserves were $528.4 billion as of 14 October, the lowest since July 2020, and sharply down from the record $642.4 billion last year. The rupee has crashed more than 10% against the US dollar this year and slipped below 83 for the first time in past few weeks.
To help arrest rupee’s record fall, the Reserve Bank of India has also burned $114 billion from its forex coffer, triggering concerns on this front as well. The central bank has however attributed about two-thirds of the decline to valuation effects. The decline of the forex reserves cannot be solely attributed to a central bank’s intervention to defend the currency against the dollar.
There has been a sharp depletion of forex reserves in the last few months, but what is comforting is India’s high level of reserves that has enabled it to withstand the sharp depletion without any major panic so far. Another comforting factor is the country’s low external debt (20% of gross domestic product) and the short-term debt as a share of total external debt is around 20%.
After the 15th edition of IPL concluded in 2022 with the recently formed Gujarat elephants, led by Hardik Pandya, securing palm, the Board of Control for Cricket in India( BCCI) chairman Sourav Ganguly has said, “ The IPL generates further profit than the English Premier League”.
The English Premiere League or the Premiere League is considered the most viewed football event in the world. The Premier League, is the top position of the English football league system. queried by 20 clubs, it operates on a system of creation and deportation with the English Football League. still, Ganguly’s statement comes at a time when media companies are are fighting for the elusive media rights to the IPL, the world’s richest sports league, anticipated to cost up to$ 6 billion. Ganguly further stated that he feels proud to see that the game of justice has been evolving in India. He also comment “ I have seen the game evolve, where players like me earned a many hundreds and now have the eventuality of earning crores. This game is run by the suckers, by the people of this country, and by the BCCI, which was formed by justice suckers. This sport is strong and will continue to evolve.” The IPL generates further profit than the English Premier League. It makes me feel happy and proud that the sport I love has evolved to come so strong,” Ganguly said at India Leadership Council Event while speaking to Deepak Lamba, CEO, Worldwide Media, President, Times Strategic results Limited. The IPL 2022 was held in a much larger scale than the former seasons.
How IPL made cricketers and BCCI one of the richest in global sport ? The Indian Premier League( IPL) in a span of just 15 times has managed to come one of the biggest sporting leagues in the world. The initial edition of the IPL was played in 2008 and there has been no looking back ever since as the T20 league continues to witness a massive growth in its fashionability across the globe. IPL is arguably the biggest T20 league in the world and has the stylish players from across the globe playing their trade in the competition. The Indian Premiere league has created millionaires out of youthful cricketers and made BCCI as one of the richest governing bodies in the world of global sport. Aruguably, the high- octane, big- hitting carnivalesque event provides a must- see product, driving broadcast subscriptions by the millions and pulling in huge advertising profit. IPL brigades admit a share of the TV rights and backing plutocrat, and around 10 to 15 percent of ticket deals. They can also induce their own profit through economic shirt or other auspices.
Profit Creators The BCCI earned$ 533 million from the IPL in 2020, treasurer Arun Dhumal told Indian media, but its finances are marked in secretiveness. In its 15th time, the BCCI is anticipated to earn fresh profit of ₹ crore per time( ₹,715 crore for 10 times) from the new brigades besides ₹ 444 crore which it has entered from VIVO as a reassessment figure. When the event expanded to 10 brigades this time from the original eight, the transaction for the rights to enjoy the new votes drew transnational stab including the Glazer family, who enjoy Manchester United. They were eventually beaten out by Indian mogul Sanjiv Goenka’s RPSG empire, who paid the BCCI$ 930 million to form the Lucknow Super Giants. The alternate new ballot, the Gujarat Titans, bring the global adventure fund CVC Capital$ 690 million. The brigades spent nearly$ 75 million in the February player transaction, with Mumbai Indians retaining gate- keeper- batsman Ishan Kishan for$ 2 million and Punjab lords paying England’s Liam Livingstone$1.52 million for his services.
Broadcast rights are the BCCI’s biggest plutocrat- incentive. Star India, possessed by Disney, paid$2.55 billion for a five- time TV and digital rights deal that expires at the end of this season.
If not, it’s not uncommon. Until two years ago, I didn’t have a financial plan, whatsoever.
Even though I’ve been reading about money, finance, and investing ever since I made my first few bucks as a teenager, I never created a financial plan.
But now, I think every single working professional needs a financial strategy. How do you spend your money? How much do you save? What are your thoughts about debt? How do you invest your money? How much money do you need to retire?
This book was published in 1926 and as far as I can tell, it was the first popular book on personal finance.
Usually, I’m not into parables. But this is a great book. It’s the only parable that I’ve read that makes the message of the book even more powerful.
What it comes down to is this: Rich people are rich because they save their money, don’t get in debt, and don’t spend their money foolishly.
Clason recommends to save 10% of your income (I believe you should save 50% — more on that later). He calls saving “paying yourself first.” That’s an important mindset.
You only get rich by paying yourself. Don’t foolishly spend all your money on things you don’t need. When you do that, you pay others, not yourself.
Everyone should read The Richest Man In Babylon — the earlier the better.
What I enjoyed most about this book is that it teaches you to transform your relationship with money. This will change your life.
Money is something you trade your life energy for. Think about it. You work to earn money.
But you spend your time to work. That’s why Robin and Dominguez spend the first part of this book to make us aware that more is not better.
More money is especially not better if you have to put your own well-being on the line. It’s never worth it. Just ask the family of the bankers who committed suicide during any recession.
If you want to live a healthy and wealthy life, you must detach yourself from money. Instead of striving for more, get better at managing your money.
Save it. And don’t waste it on stuff you don’t need. Your Money Or Your Life starts out strategically and gets more practical towards the end.
One thing I don’t agree with is retiring early. I don’t want to retire and sit on a beach. That’s because my mentors, who are beyond the retirement age, still work and are very happy. I aspire to do the same.
But I also want to build enough wealth that I don’t “have” to work if I don’t want to. That’s one thing Robin and Dominguez also believe in.
I bought my first stocks when I was 20 years old. At the time, the finance sector was doing great, and I thought it would be good to invest in ING, the major Dutch bank.
Oh yeah, I should mention that this was in 2007, right before the financial crisis. I invested €1500 in ING and €500 in AEGON, a Dutch asset management firm.
It was about half of my savings at the time — a lot of money for a student. And a few months later, when Lehman Brothers collapsed, my stock portfolio was worth only a few hundred euros in total.
Man, I was so pissed off. I can’t even tell you how livid I was. But looking back, I understand that losing money is a part of investing.
And fortunately, I didn’t sell and waited until the stocks recovered. That took eight years, though.
I decided to not invest in individual stocks anymore. And The Intelligent Investor is one of the most important books that helped to realize investing in stocks is not for me.
If you already know that you don’t want to invest in individual stocks, you don’t have to read this book. However, if you are interested in finance, I highly recommend it. The commentary by Jason Zweig, a WSJ columnist, is also excellent.
P.S. I skipped the chapters about stock analysis because I’m not going to use it.
Indian National Rupee and US Dollar are the legal tenders in India and the US respectively. Both USD and INR are accepted in the US and India respectively because they meet following conditions which are necessary for anything to be called as money –
1. General Acceptability 2. Unit of account 3. Store of storage 4. Medium of Exchange
For general acceptability means that no one should refuse from accepting it; unit of account means that is can be used to represent the real value of an economic item; for store of value, it means that if it is stored, it value must not perish; and for medium of exchange, it means that it can be used as a medium for exchange of goods and services.
As the aforesaid conditions are satisfied for Rupee in India and Dollar in the US, both the currencies are used as money in respective countries. However, in international trade when the nations carryout exchange of goods and services among themselves, Rupee lacks the general acceptability while Dollar, Gold, Special Drawing Rights (SRD) of International Monetary Fund (IMF) and some other hard currencies like Euro, Japanese Yen, etc. are accepted by almost all countries as a medium of exchange. Thus dollar becomes the international currency while Rupee remains a currency in India only.
Rupee Vs Dollar
As it is already explained why Rupee is a national currency while Dollar is an international currency, now let’s take a look on the factors which make Dollar stronger than the Rupee.
1. Current Account Deficit
The value of any currency in terms of international currency is determined by the demand and supply of the international currency in a particular country and the demand and supply depends on the nature of Balance of Payments (BOP) of a country. BOP is the foreign trade account divided into two parts – Current Account and Capital Account. All the trade in goods and services and foreign remittances are entered in current account while financial exchanges like loans, or overseas investments, Foreign Direct Investment (FDI) or Foreign Institutional Investment (FII) etc. are the part of capital account. If the value of exports is higher than the value of imports, then their will be a current account surplus and there will be a current account deficit if vice versa.
The export from a country determines the supply of dollar as they will receive dollar from international market for their sold goods and services. Similarly, the imports determine demand of dollar. If imports from a country are higher than the exports from that country, then the demand of dollar will be higher than supply and the domestic currency like Rupee in India, will depreciate against the dollar. Similarly, if exports outpace the imports, then supply of dollar will exceed demand and Rupee will appreciate against dollar in India. In other words, if a country is having current account deficit, the local currency will depreciate against dollar while if it is having a current account surplus, the local currency will appreciate.
In case of India, if BOP account will continue to have a current account deficit, Dollar will continue to overpower the Rupee.
2. Movement Of Capital
Not only just current account but capital account of BOP also determines the value of dollar against a currency. The capital account details the flow of foreign capital in and out of the country. If there is net foreign capital inflow in India in the form of FDI or FII, then the supply of dollar will be much higher than demand and Rupee will strengthen against the dollar. Similarly if there is net capital outflow, Rupee will depreciate.
3. Other Factors
There are several other factors also which determine the supply of dollar into the country. The foreign capital usually flows into the region which provides minimum risk and maximum returns. Higher interest rates in a country suggests higher returns. Therefore whenever Fed Reserve of the US increase the interest rates, there is turmoil in all financial markets across the globe because there is a risk of flight of Dollar back to the US. Since US is the largest economy of the world, it is also minimises the risk. As the risk factor also determines capital movement, most countries give significance to the risk rating by international agencies like Moody’s, Fitch etc. It is because of the risk factor that despite high interest rates in Zimbabwe, most investors ignore it.
And last but not the least, Dollar is an international reserve currency and it is because of this reason, it overpowers most currencies across the world. The strength of US economy vis a vis Indian economy is another reason why Dollar overpowers the Rupee.
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