Hello. As of today, the value of Indian Rupees hit
Rs 68.45 for USD 1.00. Because of this, the Indian economy has declined. As per normal, the anti-Modi group have started to
create memes and write articles like this. Let us put all of this aside for now. I will answer some questions about a nation’s currency
value. Please try and understand. This video is not about politics, but beyond that, it
is about general knowledge. In your own home, if you have kids, teach them about
this topic as general knowledge. Now let’s get to the subject of this video. I’ll tackle this after posing questions one by one. In a country, is there any rule of law that says
how many currency notes must be printed? The answer is, NO. A country can print as many notes as it wants. Some claim that we base the quantity of notes
to be printed based on the value of gold. This might have been an old practice. But today,
there are more complicated formulas. Ultimately, the quantity of notes to be printed is
fully under the control of the country. Then here comes another question. Each men and women have numerous loans. Why
not print Rs 15 lakhs for each person and give them? Our people, our rights, our money. Why not? Why can’t we print these notes? We can,
but then why should we NOT print these notes? Is it because people will become lazy if they
get more money? Not really because people will still work no
matter what! What else do you think is the reason? Because economy will only decline if notes are
printed haphazardly. Nothing good comes out of it. Please understand carefully why I am saying this. You can then easily understand the value of a
Country’s currency. If say you become the Prime Minister of a country
And deposit Rs 10-15 lakhs in each citizen’s account. What happens the next immediate day? A chain
Reaction happens in the market. Take Trichy for example. Say in one day in Trichy, 500 motorbikes are sold. After 15 lakhs have been distributed, one-day sales
Volume will increase to 5000 the next day! More cash in hand means demand for motorbikes
increases. Everybody will want a motorbike now! So the demand for the product increase. Do you
understand this? After that, when demand increases in market, the
Manufacturer will have to increase production. Increased production means, increase in labour,
and then increase in salary expenses. Beyond all of this, there are other factors
to consider. Raw materials are needed to manufacture bikes. So demand for raw materials such as steel, rubber,
plastic, will also increase. Because more bikes need to be produced. Therefore, demand on suppliers of raw materials will
also increase. This will create a huge chain reaction as demand
increases. Do you understand this? This will not only happen in Honda, but also for
TVS, Hero, Harley Davidson. In all bike stores, demand from customers will
increase. When demand increases for raw materials, the price
of the raw materials will also increase. This is because, in a free market economy, price of
a product depends on its demand. For example, if there are only ten marker pens, but there
are 100 customers, then price of this pen will increase. In just one place called Trichy, 5000 bikes must be sold
in place of 500 bikes, because of increased demand. But understand that this does not just happen to bikes
alone. ALL products in the market will have high demand. This is because of need. Some prefer bikes, some would
prefer refrigerators, or fan or even a car. The prices of ALL products will increase. This price hike will NEVER benefit the economy.
The economy will only be thrashed. The value of the Indian currency will decline only
further, but nothing good will happen. Can you understand this? I’ll repeat again. We only took Trichy as an example.
But this will happen all over India. If we give Rs 15 lakhs to each people in India. Annually, about 17.5 million two-wheelers are sold. For 2018, at least 20 million two-wheelers is expected
to be sold. This situation will create so much demand such that
Within a year, demand will increase 20-fold. Because people have a lot of cash with them. This change has to happen gradually, but the sudden
spike will cause economy to decline drastically! Why do you think the price of gold is high?
Because there is not enough gold for everyone. If say, a huge mountain of gold is discovered. The
price of gold will reduce drastically. This is because the price of a product depends very
much on the market demand. Now, here. A country’s currency value, relative to
US Dollar value. What does it mean? Why do we compare one country’s currency value
to another country’s currency value? A bike that is sold for USD 1,000 in US, is sold for
Rs 68,450 in India. This is what it means. Therefore, it is illogical to say that just because of
currency value depreciation, economy is decaying. If demand keeps increasing, a bike that is being sold
for Rs 70,000 will increase to Rs 700,000! Hypothetically. So what happens? Currency value completely degrades
if each citizen of India gets Rs 15 lakhs! An important note here. People claim that PM Narendra Modi did not keep his
promise of depositing Rs 15 lakhs in everybody’s accounts. This is a BIG lie! Because he has been a CM for 15 years! Everyone knows that it is impossible to deposit Rs 15 lakhs
In everyone’s accounts! They also know you SHOULD NOT do it. If people really need the money, he CAN do it. But he
KNOWS nothing good will come out of it! Would he then have given such a promise?
What he actually said was: “The amount of black money hidden overseas is
equivalent to having Rs 15 lakhs in all your accounts!” Those who spread exaggerated news about Rupee
value climbing to Rs 70 for US 1 dollar. Hearing such news we assume that the Indian
economy has declined, mistakenly! If this is true, then let me ask you. So 1 US dollar is
equivalent to Rs 68. Right? Then what about Japanese Yen equivalent to 1 USD?
JPY 110! For us it is Rs 68, but in Yen it is 110! So would that mean Japan’s economy has declined?
Japan has the strongest economy in the world! You can verify yourself. Would the currency value
make Japan any less economically successful then? It’s not like that. Take South Korea for example.
What do you think is the rate of Won=USD? It is approximately 1,112 Won for 1 USD! Would that mean South Korea did not develop
its economy at all? It’s not like that. The currency rates only indicate
the quantity of currency notes in circulation. South Korea has more notes in circulation, while
the US has less notes in circulation. If say you send $1000 from US when the rate was
Rs 60, you will then receive Rs 60000. Right? If you send the same $1000 from US today,
you will receive Rs 68000. Can I say that? That is wrong too! If Rupee value appreciates from Rs 65 to Rs 68
for 1 USD, and people send money from overseas would that mean your income has increased
from Rs 65,000 to Rs 68,000? Firstly, a comparison like this should NOT
even be made! That’s the truth.
Alright. So if currency value should not be interpreted using
exchange rates, then what should we use? This is our last question. I’ll end this video
after answering this question. How should a country’s currency value be
measured? What is the right way to do this? The currency note by itself is just paper, and
it has no value by itself. How long and how fast is the currency note
in circulation in the country? This is what currency value is depended upon! Please understand this. Assume you get Rs 1 lakh salary. In a good economy, that cash must not be
in your hand. That Rs 1 lakh salary you receive must be
in circulation in the market. To do that, the economy makes you buy a home,
pay EMI, buy assets and pay loan, etc. Put the money in fixed deposit, or mutual fund,
or in savings. Cash should be in circulation. If you buy a refrigerator, the money circulates to
that company’s raw materials supplier. The better the economic infrastructure of the
country, the deeper the cash circulates. Let me give you the best example to make you
understand this. Most of you only play Cricket and are fans of
the sport. So what happens? All the industries related to the Cricket sport,
eg. Bat and ball manufacturers, etc. All these sectors will arise and only these
industries will flourish. Right? If say, all 33 Olympic sports, like archery, football,
etc. along with Cricket become popular in India. All industry sectors dependent on these 33 Olympic
sports will arise and start production in India. Instead of money circulating to one sport-related sector,
money will circulate to all 33 sports-related sectors. Then, the economy will be healthier!
This will also create more jobs! More money will be circulated back to the people! This is why every country focuses more on
manufacturing sectors. Now you understand that currency value depends
on its circulation. To what extent the money travels back to the people.
How long and fast it circulates in the market. In conclusion, what did we understand? It is in our control when it comes to how
many currency notes we can print. We can give each citizen Rs 15 lakhs, but
We know why we SHOULD NOT. Comparison of any country’s currency values with
each other to determine its economic success Is wrong! It is only an exchange rate, nothing more! A currency’s value depends on how long and
fast it travels/circulates within the country. And the level of infrastructure built in a country
to facilitate this currency circulation. Hope you understood. If you have more questions,
please do some self-study on this. If you have questions & doubts, email me and if I
have time, I’ll try my best to reply to you. Thank you!