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CERTIFICATE

It is certified that the project work entitled ―Collapse of dollar value & its impact in India” 

submitted by Manpreet Kaur to Mata Gujri College, Fatehgarh Sahib (An Autonomous

college) for the award of degree in ―Master of Business Administration‖ (MBA), is carried outunder my guidance and supervision.

Guide:

Assist Prof. Sourav Sharma

DECLARATION

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I, Manpreet Kaur, hereby declare that project titled “Collapse of dollar value & its impact in

India” is the outcome of my research work. This research has not been submitted earlier to any

institution or university for the award of any degree/diploma.

The project report is the result of my own hard work and self belief.

Manpreet Kaur 

MBA-II Year

Mata Gujri College, Fatehgarh Sahib

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PREFACE

This report describes the Collapse of dollar value & its impact in India . The idea of preparing

this research report comes from our degree of Masters of Business Administration. Theoretical

knowledge without the practical exposure is of little value. Theoretical studies in classroom are

not sufficient to understand the functioning and nature of the research. Therefore it becomes

necessary to undergo any research project work.

I complete my research project on the topic ―Collapse of dollar value & its impact in India‖.

During the research project I got an opportunity to learn valuable things, which I could never 

 been able to learn from theory classes.

In nutshell, whole of my report was invaluable experience in the pursuit of knowledge. In the

forthcoming pages attempt has been made to present a comprehensive report concerning

different aspect of my research. The overall gain to me will be reflected in the report itself.

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ACKNOWLEDGEMENT

I, Manpreet Kaur, would like to acknowledge the contributions of the following groups and

individuals to the development of my project.

I express my sincere gratitude to Prof Kamalpreet kaur (H.O.D.) for giving me the opportunity

to work on this project.

I feel highly obliged and indebted to my guide Prof. Sourav Sharma of management

department, and also to all the faculty members for not only providing the moral and

organization support but also for inspiring encouragement during the course of the work.

Without their help it wouldn‘t have been possible for me to accomplish this project in time.

Last but not least I wish to avail myself of this opportunity, express a sense of gratitude and love

to my friends and my beloved parents for their manual support, strength, and help and for 

everything.

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CONTENTS

Sr. No. CONTENTS PAGE NO.

CHAPTER -1 INTRODUCTION OF THE TOPIC 1

1.1 Abstract of collapse of dollar value 

1.2 Introduction of dollar value

1.3 The History of the US Dollar 

1.4 What event could trigger a dollar collapse?

1.5 Factors affecting Indian rupee changes?

1.6 Impact of dollar fluctuations on the Indian economy

1.7 Reason for decline vale of Indian rupee in foreign

exchange market

1.8 Meaning of dollar- cost averaging

1.9 Meaning of GDP

1.10 components of GDP by expenditure

1.11 GDP V/S GNP

1.12 What is GDP and why is it so important?

1.13 Gross domestic product value

CHAPTER-2 REVIEW OF LITERATURE 31-36

CHAPTER-3 OBJECTIVES AND RESEARCH

METHODOLOGY

38-39

3.1 Objectives

3.2 Research methodology

3.3 Need of the study

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CHAPTER-4 ANALYSIS AND INTERPRETATION 49-53

CHAPTER-5 FINDINGS & CONCLUSION 54-55

REFERENCES 56

APPENDIX 57-58

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SUMMERY OF COLLAPSE OF DOLLAR VALUE:-

Value averaging, also known as dollar value averaging (DVA), is a technique of adding to an

investment portfolio to provide greater return than similar methods such as averaging and

random investment. It was developed by former Harvard University professor Michael E.

Edleson. Value averaging is a formula-based investment technique where a mathematical

formula is used to guide the investment of money into a portfolio over time. With the method,

investors contribute to their portfolios in such a way that the portfolio balance increases by a set

amount, regardless of market fluctuations. As a result, in periods of market declines, the investor 

contributes more, while in periods of market climbs, the investor contributes less. In contrast to

dollar cost averaging which mandates that a fixed amount of money be invested at each period,the value averaging investor may actually be required to withdraw from the portfolio in some

 periods. Value averaging incorporates one crucial piece of information that is missing in dollar 

cost averaging – the expected rate of return of your investment. The investor must provide this

information for the value averaging formula. Having this data allows the value averaging

formula to identify periods of investment over-performance and under-performance versus

expectations. After the investment has over-performed, the investor will be required to buy less

or sell (selling high). After the investment has under-performed, the investor will be required to

 buy more (buying low). Research suggests that the method does indeed result in higher returns at

a similar risk, especially for high market variability and long time horizons. American financial

theorist and money manager William J. Bernstein has stated that value averaging is superior to

lump sum investing and dollar cost averaging for deploying a large sum into a portfolio. In this

case, Professor Edleson recommends a VA period of three years. He suggests an infusion or 

withdrawal of capital every three or six months. For example, if one were to win or be bequethed

one million dollars, roughly 8.33 percent, with the exact amount being set by the formula, could

 be invested every quarter. It is important to note that the quarterly or semiannual amount can

vary greatly, even resulting in a withdrawal, as mentioned above. Opponents argue that this

misses the opportunity of already being fully invested when a large market upswing occurs.

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INTRODUCTION OF DOLLAR VALUE:-

The United States dollar (sign: $; code: USD; also abbreviated US$), also referred to as the U.S.

dollar or American dollar, is the official currency of the United States of America and its

overseas territories. It is divided into 100 smaller units called cents. 

The U.S. dollar is the currency most used in international transactions and is one of the world's

dominant reserve currencies. Several countries use, and in many others it is the de facto currency. 

It is also used as the sole currency in two British Overseas Territories, the British Virgin

Islands and the Turks and Caicos islands.

The Constitution of the United States of America provides that the United States Congress shall

have the power "To coin money". Laws implementing this power are currently codified in

Section 5112 of Title 31 of the United States Code. Section 5112 prescribes the forms in which

the United States dollars shall be issued. Those coins are both designated in Section 5112 as

"legal tender" in payment of debts. TheSacagawea dollar is one example of the copper alloy

dollar. The pure silver dollar is known as the American Silver Eagle. Section 5112 also provides

for the minting and issuance of other coins, which have values ranging from one cent to fifty

dollars.[18] These other coins are more fully described in Coins of the United States dollar. 

The Constitution provides that "a regular Statement and Account of the Receipts and

Expenditures of all public Money shall be published from time to time". That provision of the

Constitution is made specific by Section 331 of Title 31 of the United States Code. The sums of 

money reported in the "Statements" are currently being expressed in U.S. dollars (for example,

see the 2009 Financial Report of the United States Government). The U.S. dollar may therefore

 be described as the unit of account of the United States.

The word "dollar" is one of the words in the first paragraph of Section 9 of Article 1 of the U.S.

Constitution. In that context, "dollars" is a reference to the Spanish milled dollar, a coin that had

a monetary value of 8 Spanish units of currency, or reales. In 1792 the U.S. Congress adopted

legislation titled An act establishing a mint, and regulating the Coins of the United States.  

Section 9 of that act authorized the production of various coins, including "DOLLARS OR 

UNITS — each to be of the value of a Spanish milled dollar as the same is now current, and to

contain three hundred and seventy-one grains and four sixteenth parts of a grain of pure, or four 

hundred and sixteen grains of standard silver". Section 20 of the act provided, "That the money

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of account of the United States shall be expressed in dollars, or units... and that all accounts in

the public offices and all proceedings in the courts of the United States shall be kept and had in

conformity to this regulation". In other words, this act designated the United States dollar as

the unit of currency of the United States.

The U.S. dollar bill uses the decimal system, consisting of 100 equal cents (symbol ¢). It is also

officially divided into 1,000 mills (symbol ₥) or ten dimes, while ten dollars is equal to an eagle. 

However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the

name of the coin with the value of 10¢, while "eagle" and "mill" are largely unknown to the

general public, though mills are sometimes used in matters of tax levies, and gasoline prices are

usually in the form of $X.XX9 per gallon, e.g., $3.599, sometimes written as $3.599 ⁄ 10. When

currently issued in circulating form, denominations equal to or less than a dollar are emitted

as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal

Reserve notes (with the exception of gold, silver and platinum coins valued up to $100 as legaltender, but worth far more as bullion). Both one-dollar coins and notes are produced today,

although the note form is significantly more common. In the past, "paper money" was

occasionally issued in denominations less than a dollar (fractional currency) and gold coins were

issued for circulation up to the value of $20 (known as the "double eagle," discontinued in the

1930s). The term eagle was used in the Coinage Act of 1792 for the denomination of ten dollars,

and subsequently was used in naming gold coins. Paper currency less than one dollar in

denomination, known as "fractional currency," was also sometimes pejoratively referred to as

"shinplasters." In 1854, James Guthrie, then Secretary of the Treasury, proposed creating $100,

$50 and $25 gold coins, which were referred to as a "Union," "Half Union," and "Quarter 

Union,"[22] thus implying a denomination of 1 Union = $100.

Today, USD notes are made from cotton fiber paper, unlike most common paper, which is made

of wood fiber. U.S. coins are produced by the United States Mint. U.S. dollar banknotes are

 printed by the Bureau of Engraving and Printing and, since 1914, have been issued by

the Federal Reserve. The "large-sized notes" issued before 1928 measured 7.42 inches (188 mm)

 by 3.125 inches (79.4 mm); small-sized notes, introduced that year, measure 6.14 inches

(156 mm) by 2.61 inches (66 mm) by 0.0043 inches (0.11 mm). When the current, smaller sized

U.S. currency was introduced it was referred to as Philippine-sized currency because thePhilippines had previously adopted the same size for its legal currency.

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The history of the US Dollar

The currency of the United States can be traced back to 1690 before the birth of the countrywhen the region was still a patchwork of colonies. The Massachusetts Bay Colony used paper 

notes to finance military expeditions. After the introduction of paper currency in Massachusetts,the other colonies quickly followed.

Various British imposed restrictions on the colonial paper currencies were in place until beingoutlawed. In 1775, when the colonists were preparing to go to war with the British, theContinental Congress introduced the Continental currency. However, the currency did not lastlong as there was insufficient financial backing and the notes were easily counterfeited.

Congress then chartered the first national bank in Philadelphia - the Bank of North America - tohelp with the government's finances. The dollar was chosen to become the monetary unit for theUSA in 1785. The Coinage Act of 1792 helped put together an organised monetary system thatintroduced coinage in gold, silver, and copper. Paper notes or greenbacks were introduced intothe system in 1861 to help finance the Civil War. The paper notes used several differenttechniques including a Treasury seal and engraved signatures to help diminish counterfeiting. In1863, Congress put together the national banking system that granted the US Treasury permission to oversee the issuance of National Bank notes. This gave national banks the power to distribute money and to purchase US bonds more easily whilst still being regulated.

The Federal Reserve Act of 1913 created one central bank and organised a national bankingsystem that could keep up with the changing financial needs of the country. The Federal ReserveBoard created a new currency called the Federal Reserve Note. The first federal note was issuedin the form of a ten dollar bill in 1914. Finally, a decision by the Federal Reserve board wasmade to lower the manufacturing costs of the currency by reducing the actual size of the notes by

30%. The same designs were also printed on all dominations instead of individual designs.

The designs of the notes would not be changed again until 1996 when a series of improvementswere carried out over a ten-year period to prevent counterfeiting.

Participating Members

The United States Dollar has been adopted, and in some cases used as the official currency, inmany different territories and countries. This process of incorporating the currency of onecountry into a different economic market is called 'dollarization'. Dollarization of the US Dollar has occurred in the British Virgin Islands, East Timor, Ecuador, El Salvador, Marshall Islands,Federated States of Micronesia, Palau, Panama, Pitcairn Islands, and Turks and Caicos Islands.

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What Is a Dollar Collapse?

A dollar collapse is when the value of the dollar falls so fast that all those who hold dollars panic,and sell them at any cost. In this scenario, sellers would include: foreign governments whohold U.S. Treasuries, traders in exchange rate futures who trade the dollar versus other 

currencies, and individual investors who demand assets denominated in anything other thandollars. The collapse of the dollar means that everyone is trying to sell their dollar-denominatedassets, and no one wants to buy them, driving the value of the dollar down to near zero.

What Would Cause the Dollar to Collapse?

Several conditions must be in place before the dollar could collapse. First, there must be anunderlying weakness. Second, there must be a viable currency alternative for everyone tostampede into. Third, a triggering event would need to occur.The first condition does exist. The dollar declined 54.7% against the euro between 2002 and2012. Why? The U.S. debt nearly tripled during that time period, from $5.9 trillion to $15trillion. This increases the chance the U.S. will let the dollar's value slide, allowing it to repay thedebt with cheaper money.

Is There a Viable Alternative to the Dollar?

The dollar became the currency when President Nixon abandoned the standard in the 1970s. Thedollar is used for 43% of all cross-border transactions. The dollar's value is strong as measured by central bank reserves -- 61% of these foreign currency reserves are in dollars. The next most popular currency?The euro, which comprises less than 30% of reserves. The Eurozone debtcrisis has only weakened the euro as a viable alternative to the dollar as a global currency.

China and others have argued for a new global currency. However, replacing the dollar would bea massive undertaking, would require great global resolve and not happen quickly.

What Event Could Trigger a Dollar Collapse?

Altogether, foreign countries own $5 trillion in U.S. debt (as of December 2011). If China,Japan or other major holders started dumping these holdings of Treasury notes on thesecondary market, this could cause a panic leading to collapse. China owns more than $1trillion in U.S. Treasuries. That's because China pegs its currency, the yuan, to the dollar. Thiskeeps the prices of its exports to the U.S. relatively cheap. Japan owns more than $800 billion in

Treasuries, also keeping its currency, the yen, low to stimulate exports to the U.S. Japan is tryingto move out of a 15 year deflationary cycle, and the 2011 earthquake and nuclear disaster hasn'thelped.

China and Japan Can, But Won't, Trigger a Dollar Collapse:

Would China and Japan ever really do this? Only if they saw their holdings declining in valuetoo fast AND they had another market to sell their products to. The economies of Japan and

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China are dependent on U.S. consumers. They know that if they sell their dollars, their productswill cost more in the U.S., and their economies will suffer. Right now, it's still in their bestinterest to hold onto their dollar reserves.China and Japan are selling more to other Asian countries, who are gradually becomingwealthier. However, the U.S. is still the best market in the world. (See Demand in the U.S.

Economy) 

If the Dollar Collapses, What Would Happen?

A sudden dollar collapse would create global economic turmoil as investors rush to other currencies, such as the euro, or other assets, such as gold or other commodities. Demand for Treasuries would plummet, driving up interest rates. Import prices would skyrocket,causinginflation. U.S. exports would be dirt cheap, boosting the economy briefly. Unfortunately, uncertainty,inflation and high interest rates would strangle possible business growth. Unemploymentwouldworsen, sending the U.S. back into recession or even creating a depression. 

How Can I Protect Myself from a Dollar Collapse?

Protect yourself from a dollar collapse by first defending yourself from a gradual dollar decline.Keep your assets well-diversified by holding foreign mutual funds, gold and other commodities.A dollar collapse would create global economic turmoil. To respond to this kind of uncertainty,you must be mobile. Keep your assets liquid, so you can shift them as needed. Make sure your  job skills are transferable. Update your passport, in case things get so bad for so long that youneed to move quickly to another country.

Is a Dollar Collapse Imminent?

Fortunately, it's highly unlikely that the dollar will collapse. That's because any of the countrieswho have the power to make that happen (China, Japan and other foreign dollar-holders) don'twant it to occur. It's not in their best interest. Why bankrupt your best customer? Instead, thedollar will probably continue to decline gradually, as these countries slowly find other markets.For more, see Dollar Decline or Dollar Collapse?

2002-2007 - The dollar fell 40% as the U.S. debt grew 60%. In 2002, a euro was worth $.87 vs$1.44 by December 2007. (Source: Federal Reserve, Exchange Rates) 

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The Dollar Value Is Measured by Exchange Rates:

The U.S. dollar is most easily measured by its exchange rate, which compares its value to other currencies. Currency exchange rates allow you to determine how much of one currency you canexchange for another. Exchange rates change every day because currencies are traded on the

foreign exchange market, known as forex. A currency's forex value depends on a lot of factors,including central bank interest rates, the country's debt levels, and the strength of its economy.Most countries allow their currencies to be determined by the forex market. This is known as aflexible exchange rate.

Dollar Value Compared to Euro:

  2012 - The dollar lost value against the euro, as it appeared the euro zone crisis was beingmanaged. By the end of February, the euro was worth $1.3463.

  2011 - The dollar's value against the euro fell 10%, and then regained ground. As of December 30, 2011, the euro was worth $1.2973.

  2010 - The Greece debt crisis strengthened the dollar. By year end, the euro was only worth$1.32.

  2009 - The dollar fell 20% thanks to debt fears. By December, the euro was worth $1.43.  2008 - The dollar strengthened 22% as businesses hoarded dollars during the global financial

crisis. By year end, the euro was worth $1.39.

Factors affecting Indian rupee changes?

The value of any currency in an economy is hard to bet, to be stable for a long period of time as

there are number of factor influencing its appreciation and the depreciation. The currency value

of an economy influences the growth rate of GDP in an economy. Several other factors that have

a direct influence on the over or the undervaluation of a currency are listed below:

Capital flows and the stock market of India

It's important to note that in spite of suffering recession, an economy can grow if the capitalinflow is constant or continuously rising. In India even if the GDP rate is less, the currency can

still get overvalued due to excessive capital inflows made by the FII's in the Indian economy.

Global currency trends 

Like many other currencies Indian rupee have also tied its knot with some of the big economies

of the world including the names of UK, US, Japan and Canada. The depreciation or appreciation

in the currency any of these, especially in the US dollar, influences the valuation of the Indian

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currency in one way or the other.

RBI Intervention 

The valuation of the Indian currency highly depends on RBI that manages the 'balance of 

 payments', slight modification in which can define the over or the under valuation of the Indiancurrency.

Oil factors

India is a major importer of oil and the valuation of Indian money gets easily affected by the

increase in the prices of the crude oil. It can further result in spreading inflation in an economy

due to the over valuation of the Indian currency.

Political factors 

Several other factors that affect the currency stability are some political factors like change in the

government set up, introduction of new export and import policies, tax rates

and many more.

Remittances from abroad

Conclusively, there are many factors that arise from the economic structure of Indian economy

and affect the valuation of the Indian currency that in turn affects the economic growth rate of 

the economy of a country.

How Dollar Fluctuations Impact the

Indian Economy

To better understand the fluctuating dollar value against the rupee, let us get to know some basics:

Exchange rate  –  the rate at which a currency can be exchanged. It is the rate at which onecurrency is sold to buy another.

Foreign exchange market  –   Also known as ―Forex‖ or ―FX‖. It is a market to trade currencies 

Indian foreign exchange rate system  – India FX rate system was on the fixed rate model till the90s, when it was switched to floating rate model. Fixed FX rate is the rate fixed by the central bank against major world currencies like US dollar, Euro, GBP, etc. Like 1USD = Rs. 40.Floating FX rate is the rate determined by market forces based on demand and supply of acurrency. If supply exceeds demand of a currency its value decreases, as is happening in the caseof the US dollar against the rupee, since there is huge inflow of foreign capital into India in USdollar 

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Why is the US dollar walking down?  – When it comes to the US being a consumer, it has oneof the largest appetites in the world. To keep up its demand for consumption, its imports are hugewhen compared to exports. This created pressure since there were more payments in dollars thanreceipt of any other currency, which made the supply of the dollar greater for imports paymentand less receipt of foreign currency from exports. This resulted in the depreciation of the dollar‘s

value, which again caused more outflow of dollar for import payments. This created a state of inflation and made consumables costlier to US. To control inflation US resorted to increase ininterest rates to cool down pressure on demand side of consumption. This factor along withrecession in all other sectors, particularly real estate, is causing the mighty US dollar to shake.

Impact of dollar fluctuations on the Indian economy 

Until the 70s and 80s India aimed at to be self-reliant by concentrating more on imports andallowing very little exports to cover import costs. However, this could not last long because theoil price rise in the 1970s and 80s created a big gap in India‘s balance of payment. Balance of  payment (BOP) of any country is the balance resulting from the flow of payments/receipts

 between an individual country and all other countries as a result of import/exports happening between an individual country, in our case India and rest of the world. This gap widened duringIraq‘s attempt to take over Kuwait. Thereafter, exports also contributed to FX reserve along withForeign Direct Investment into the Indian economy and reduced the BOP gap

Indian rupee appreciation against dollar impacted heavily to the following:

1.  Exporters

2.  Importers

3.  Foreign investors

Exports from India are of handicrafts, gems, jewelry, textiles, ready-made garments, industrialmachinery, leather products, chemicals and related products. Since the 1990s, India is theworld‘s largest processor of diamonds. The mentioned export items contribute substantially toforeign receipts. During the periods when the dollar was moving high against the rupee,exporters stood to gain, when $1 = Rs. 48, was getting them Rs. 4800 for every $100. Since the beginning of the year 2007, rupee appreciated by about 10%. With its value of rupee Rs. 39.35 =$1 as on 16 Nov 2007, for every $100, exporters would get only Rs. 3935. This difference istowing away the profit margins of exporters and BPO service providers alike.

Imports to India are of petroleum products, capital goods, chemicals, dyes, plastics, pharmaceuticals, iron and steel, uncut precious stones, fertilizers, pulp paper etc. With the same

scenario as given for export, if we analyze - an importer is paying Rs. 3935 now instead of Rs.4800 paid during yester years for every $100. This gain on FX is likely to create savings in cost,which could be passed on to consumers, thereby contributing to control inflation

Foreign investment into India is also contributing well to dollar depreciation against dollar. Withthe recent liberalized norms on foreign investment policy like – Foreign investment of up to 51%equity limit in high priority industries; foreigners & NRIs are allowed to repatriate their profitsand capital with exception for Indian nationals who were allowed to do so only under special

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circumstances; allowing free usage of export earnings to exporters, made foreign investment inIndia very attractive. It is this favorable atmosphere which made FX reserve surplus in US dollar and helped rupee to appreciate

Conclusively, appreciation and depreciation of rupee cannot certainly be taken as beneficial to

the Indian economy in general. On one hand the rupee appreciation will affect exporters, BPOs,etc., on the other, rupee depreciation will affect importers. So now it depends on what the futurehas to reveal for, how effectively the central bank can balance the FX rates with little impact tothe relative areas of FX usage. Can the Dollar remain king or not, is no longer a million dollar question, but a million Rupee question!

Comparison of Dollar to Rupee Exchange Rates

The Indian Rupee is the official currency of India.

Exchange Rates vary by the transaction amount and the method of transfer. The rates and feeshown are for on-line transfer of under $1000 from U.S. to India. Click on the Institution name to

view further details on its exchange rate, transaction fee and terms & conditions.

Institution Per

$ Fees and Comments 

Axis Bank  

+91-22-6707-

4407

53.88

$0 feesIndicative Exchange RateThe money can only be transferred in an account with any bank inIndiaBank transfer (ACH mechanism) takes 3-5 business daysOnline transfer limits: $ 100 min. and $10,000 max.Doesn't accept Cash, Credit or Debit CardsOther transfer mechanisms include Wire Transfer and DD

Bank of India 

1-212-753-6100

53.85

$2.50 feesIndicative Exchange RateOnline bank trasnfer (ACH mechanism) takes 3-5 business days

HDFC Bank  

1-888-978-425753.79

Fee of Rs 25; Additional Rs. 0.75 per thousand for non-HDFC bank transfers

Indicative Exchange RateOver 1650 locations in IndiaTakes 3 to 4 days. Min: $100 Max: $5000

ICICI Bank   53.41Remittance Service Charge of $2.00 (inclusive of service tax@10.30%) for amounts of $1000 or belowFixed exchange rates

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1-866-424-2448 ACH mechanism of transfer into any ICICI Bank Remittance cardor into any resident Visa Debit Card account issued in IndiaMoney deposited into any ICICI bank account with over 2,500 branches in India OR into bank accounts with over 100 banks inIndia

Other Delivery Mechanisms: Demand Draft, Cash

Indian Bank  

1-866-688-2156

53.57

Fee of $9 for $1000 remittanceIndicative Exchange RateMoney can be remitted to an account with any of the partner  banks or else as a demand draftRemittance limit: $5,000 max.Transfer takes 7 days

Moneydart 

1-866-372-3874

53.36

Fee of $15 for any amount remitted. Fee of $5 for any amount

remitted online with the use of promotion code EE72FE02BCGuaranteed Exchange RateBank Transfer (ACH mechanism) takes 24-48 hrs for transfer Unlimited amount for bank deposit or draft delivery at homeBank draft delivery at home takes 3 days onlyXpress Money option delivers cash at agent locationsimmediately (Rs. 50,000 max.)

IndusInd Bank  

1-860-500-5004

53.50

$0 fees to transfer to any Bank in IndiaExchange rates are guaranteed, locked-in

Regular users of IndusFastRemit are automatically upgraded tofaster paymentsBank uses ACH mechanism to transfer fundsIt takes 3-4 days before the money is available in the IndianaccountOther Delivey Mechanisms: By Direct Depost to any IndiusIndBank account and by Cheque

Remit2India 

1-888-736-4886

53.72

Fee of $5 for $1000 transfer Money can be send to over 90 banks in IndiaTransfer takes 3 working days

Other remittance mechanisms include Credit Card, Check andWire Transfer Transfer limit: $1,000 for Credt Card, no limit for both Check andWire Transfer Money received in India is either as Direct Credit to the bank,Demand Draft at home or Remit2India's Remittance Card

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Royal

Exchange 

1-888-677-6925

54.05

Fee of $12 for $1000 remittanceExchange rates are guaranteed, locked-inACH mechanism to transfer money onlineMoney can be received as cashThere are 3300 branches in India

State Bank of 

India 

1-212-521-3284

53.93

Zero for Transfer to SBI BanksRs 6 for Transfer to non-SBI Banks"Instant Transfer" is the real time rupee remittance facility fromSBI account outside India to an SBI in IndiaSBI EXPRESS REMIT uses US Automated Clearing House(ACH) network. Takes 5 days.Minimum of $50 up to $10K to an SBI bank and up to $1000 toother banks

Trans-Fast 

1-888-973-6383

53.75

Locked-In Exchange RateMinimum amount to send $50, Maximum amount $2,50024/7 Customer Service and Live Web ChatLow fees starting at $2.99, Send over $1,000 for FreeBank deposit within 24 hrs, and Cash Pick up in India at over 11,000 locationsAccept ACH & Credit Card for paymentRemittance can also be made in person at our agent locations,visit our website to find a location

Western Union 

1-800-325-6000

53.75

The rate shown is for the city of Edison in New Jersey, USA. Theexchange rate differs depending on the location of transfer Rate given at the location of transfer is GuaranteedMoney in 3 business days: Fees of $10Best option in case of emergency, money received with-in minsSend money by visiting agent location or online direct bank transfer/credit/debit cardReceive money by direct credit to a/c or cash pick up at westernunion agent location

Xoom 

1-877-815-1531

53.35

Fee of $4.99 if paid with a US Bank account and fee of $29.99 if 

 paid with Debit/Credit card. This fee is based on $1000 transfer.Guaranteed Exchange RateBank deposits within 24 Hours to most bank accounts in IndiaOther modes of delivery in India: Cash Pickup by recipients,Cash Delivery

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 Non-Resident Indians (NRIs) remitted nearly $52 billion to India last year. But even so, most NRIs wonder if they are using the right service provider for remitting their money. Is it safe touse this service? How long will it take before the money reaches the destination? Am I gettingcompetitive exchange rates? Should I wait for a few days to get better rates?

To answer these questions, we have prepared a list shown above and on the left. By clicking on

the URLs provided for each, you can access the remittance service of the bank or directly check exchange rate that it currently offers.

Use the "exchange rate trend" chart provided by Reserve Bank of India for judging "Should Iwait for a few days to send the money?"

Reason for decline value of Indian rupee in foreign exchange market

There are so many reasons of depreciating rupee, but I would like to explain the first one, which

is most important.

Why dollar is moving up and rupee is going down? There has been a recent fall in rupee since

some days ago and a dramatic increase in dollar.

First Reason - Dollar is in Demand

BRIC countries like India have emerging economy, so a huge percentage of investment in India

is from outside the country, especially from US but due to recession in US, big institutions arecollapsing and many of them are on the verge of breakdown. They are suffering huge losses in

their country. They have to maintain their balance sheets and look strong on all statements, so to

recover losses in their country, they are pulling out their investments from India. Due to this

 pulling out of investment by these big companies from India or in other terms disinvestment,

demand of dollar is raising up and rupee is depreciating.

There was a huge interest rate differential between India and US. Now RBI is reducing all kind

of rates to increase money supply in market, so deposit rates will also move downwards. It will

reduce the rate differential between two countries and affect the fixed investment in India in a

negative manner.

Second reason - Collapse of International Trade

If you observe in terms of international trade, commodity prices are crashing at international

level.

Importers are trying to accumulate dollars, as they have to pay in terms of dollars and at the end

demand is increasing against the rupee. This has not happened yet due to lack of confidence in

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all kind of markets.

Exporters have a very few orders from outside countries, so there is no matter of converting

dollar into rupee thereby decreasing demand for rupee.

Besides the above-mentioned two reasons, there are many other reasons, which I would like

share in the comments section below with you and others.

 Now 1 USD is at 55.59 Indian rupees and expected to appreciate further due to huge inflows.The major gainers are Indian IT companies including BPOs, call center outsourcing, medical

transcription outsourcing, and Indian content writers, especially Indian Adsense publishers who

also earn in dollars.

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MEANING OF DOLLAR-COST AVERAGING :-

Dollar-cost averaging is a systematic investing technique used to accumulate shares of stock or amutual fund over many month or years. You invest a specified amount of money to buy shares at

a regular interval, say each month, and then you hold them for the long term. 

As the stock price moves up, a specified dollar amount purchases fewer shares but when thestock price moves down, you buy more shares. The average price per share is computed bydividing the total cost of all shares by the number of shares. Thus, you dollar-cost average. 

Some buy-and-hold investors use dollar-cost averaging in retirement accounts with dividendreinvestment. And they fund their purchases with payroll deductions or automatic debits from a bank account. All large mutual funds and many brokerage accounts allow such automaticinvesting. 

How does Dollar-cost Averaging Work? 

Here is a simple example of dollar-cost averaging. Suppose you invest $100 each month to buyshares of a stock. The following table shows five monthly purchases at different prices and theresulting number of shares and their value. 

Dollar-cost Averaging 

Date  Price per

Share $

Invested # Shares

Bought Total # Shares

Owned Total $

Value 

March1

$50 $100 2.000 2.000 $100.00

April 1 $52 $100 1.923 3.923 $204.00

May 1 $58 $100 1.724 5.647 $327.54

June 1 $56 $100 1.786 7.433 $416.24

July 1 $61 $100 1.639 9.072 $553.41

After five purchases the total amount invested is $500 and you own 9.072 shares. Therefore, theaverage cost per share is $55.11 ($500/9.072). As of July 1, the 9.072 shares are worth $553.41.Be careful with dollar-cost averaging. It works when prices are on the upside. But if you make

repeated purchases on the downside and prices keep falling, you will lose money. Be particularlycautious with individual stocks of poorly-managed companies or stocks whose prices haveincreased rapidly. These stocks can quickly decline from very high prices to very low prices. For cyclical stocks take your profits when prices are high.Use the Dollar-cost Averaging Calculator to see how dollar-cost averaging performs with anystock.

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LITERATURE OF REVIEW:-

The Dollar Is Falling, and That‘s Good News 

By TYLER COWEN

Published: December 2, 2007

ANXIETY about the dollar continues to spread. The falling greenback is often seen as a sign of an

impending recession or the fall of the United States from global leadership. A low dollar simply

looks bad. We are, after all, used to judging ourselves against others — comparing our salaries with

the earnings of our peers, and our homes with those of our neighbors. We‘re used to thinking it is a

 big advantage to stand at the top of a numerical list.But when it comes to currencies, a higher value

neither brings national success nor predicts future prosperity. The measure of a nation‘s wealth is the

goods and services it produces, not the relative standing of its currency. Take a look at 1985-88,

when the dollar lost more ground than in the last few years. Those were good times, and the next

decade was largely prosperous as well.Today‘s lower value for the dollar reflects the success of other 

regions. Europe has shown it can make the European Union and its unified currency work, and thus

the euro has become stronger. The Canadian union appears increasingly stable, and that means a

higher value for the Canadian dollar. Over all, these geopolitical developments are good for America

even if the dollar becomes weaker in relative terms.Many observers have an exaggerated sensitivity

to the dollar‘s fall because they spend more time in relatively expensive countries. A shopping trip to

London will give an American tourist the feeling that all prices have doubled or even worse. A

weekend vacation or conference in nearby Toronto or Montreal may no longer feel like a bargain.

Furthermore many price increases from Europe come on luxury goods and thus they fall on wealthy

American buyers, who can afford it most easily. Wal-Mart serves a more working-class clientele and

it is stocked with goods from Asia, where currency values have remained weaker against the dollar.In

the case of the dollar, we need to stop thinking of its value as a marker of economic success. The

American economy has its problems, but so far the low value of the dollar has proved more a benefit

than a cost.

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Currency Crisis! So What Happens If The Dollar And The Euro Both

Collapse?By Michael, on November 26th, 2010

Some analysts are warning that the U.S. dollar is in danger of collapse because of the exploding

U.S. government debt, the horrific U.S. trade deficit and the new round of quantitative easingrecently announced by the Federal Reserve. Other analysts are warning the the euro is in danger of collapse because of the very serious sovereign debt crisis that is affecting nations such asGreece, Portugal, Ireland, Italy, Belgium and Spain. So what happens if the dollar and the euro both collapse? Well, it would certainly throw the current world financial order into a state of chaos, but what would emerge from the ashes? Would the nations of the world go back to usingdozens of different national currencies or would we see a truly global currency emerge for thevery first time?Up until recently, the idea of a world currency was absolutely unthinkable for most people. In fact, the notion that all of the major nations around the globe would agree to asingle currency still seems far-fetched to most analysts. However, if enough "chaos" is produced by a concurrent collapse of the U.S. dollar and the euro, would that be enough to get the major 

 powers around the world to agree to a new financial world order?Let's hope not, but it is gettinghard to deny that we are heading for a major currency crisis, and if the U.S. dollar and/or theeuro collapse, the world will certainly never be the same afterwards. In case you missed it, Chinaand Russia made a very big announcement the other day.They told the world that instead of using the U.S. dollar to trade with each other, they will now be using their own nationalcurrencies.Most Americans don't realize it, but that is a very, very big deal.The fact that the U.S.dollar has been the primary reserve currency of the world for decades has given the United Statesa tremendous amount of economic power. But now nations are beginning to lose confidence inthe U.S. dollar and they are slowly starting to move away from it.When the Federal Reserveannounced a new round of quantitative easing in early November, it created a huge backlashfrom other nations. For decades, many other countries have been heavily investing in dollar-

denominated assets, and now they are quite upset that those assets are going to be devalued.Chinese Finance Vice Minister Zhu Guanaco used very strong language in denouncing the Fed'snew quantitative easing scheme earlier this month....

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Why do dollar rates fluctuate?

Gerard JacksonBrookesNews.ComMonday 2 January 2006

When it comes to exchange rates confusion is the order of the day. When, for example, theAustralian dollar was sinking John Stone, former secretary to the Treasury and well-knowneconomic rationalist, summed up the subsequent confusion when he stated ―we should pay lessattention to economic theories (particularly when they are actively promoted self-interested parties in the financial markets) and concentrate on ‗what works‘‖ ( Dollar could use less

 speculation, Australian Financial Review 20 September 2000).In short, there is no knowntheoretical explanation for the dollar‘s fall, and by implication this extended to exchange ratemovements in general. Stone‘s economic commentary was bound to encourage a call for exchange rate controls — and so it did.He told us that economists and merchant bankers hadadvised the then-government ―that foreign exchange-markets were inherently self-equilibrating

via the benevolent effects of speculators; that domestic producers who found their pricing plans thrown into disarray could always ‗cover‘ through the forward exchange markets; andother such fairy tales‖.I think it would be fair to conclude from Stone's article that he opposedthe lifting of capital controls in 1983 and would not have been sorry to see them reintroduced.His thinking on this subject apparently springs from a fundamental error in the Keynesianapproach to balance-of-payments problems, and that is to focus on capital flows and incomes — and even the dreaded speculator.Despite his caustic view of the free-market economicadvice that overrode his own, it was as right then as Stone was wrong and still is. What wasmissing from the advice is the same thing that seems to be missing from Stone‘s economicvocabulary, and that is money supply.Money markets will remain in equilibrium (at leastwithin a narrow band) so long as relative money supplies are kept more or less in check. But

continual monetary injections will destabilize exchange rates. This is why the kind of exchangerate mayhem which we have experienced was absent during the gold standard, that ―barbaricrelic‖, as Keynes chose to mischievously call it. And this is why speculation becomes moreactive: markets begin to anticipate declines in purchasing power. Regardless of Stone‘ssneering reference to speculators, it is not they who are at fault but the central banks.In other words monetary expansion is the root cause of any currency's decline, not greedyspeculators..What we have here is the purchasing-power-parity theory of exchange rates thatexplains their determination in terms of the relative purchasing power of moneys. (Ricardoalso developed the same theory). As von Mises put it:Exchange rates are determined by therelative purchasing power per unit of each kind of money.Leaping 404 years to the year 1957we find a Mr J. J. Polak, a Keynesian and IMF economist, arriving at the same conclusion.

Polak tried to integrate money and credit factors into the Keynesian approach. He assumedvelocity to be stable and that nominal income would rise if the money supply was doubled.Hefound that if a country implemented a policy of credit expansion nominal incomes wouldincrease, imports would grow and a current account deficit would emerge. He concluded thatmoney supply changes will induce changes in demands for domestic and foreign goods,services and securities before any significant change in prices occurs. This conclusion is inkeeping with the classical theory which saw no reason why domestic prices should precede afall in the exchange rate.Actually there was absolutely nothing new in Polak‘s findings. In his

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classic Theory of International Trade (1933) Gottfried von Haberler stressed the same point.He in turn had been deeply influenced by his mentor Prof. von Mises who detailed this processin his article the Balance of Payments and Foreign Exchange Rates, published in Mitteilungendes VerbandesOesterreichischerBanken und Bankiers, 1919.(That Polak was unaware of thework of these Austrians — not to mention the classical economists — amply demonstrates the

extent of Keynesian intellectual insularity, of which John Stone et al. seems to be an Australianexample).What we basically have is a supply and demand situation. Let us take a quick look atthe Australian situation. From August 1993 to August 2000, M1 grew by 107 per cent whilethe currency grew by 54 per cent. In June 1999 credit was growing at an annual rate of 13 per cent, the highest annual rate since early 1996. It was credit expansion that fuelled consumption,drove down the dollar and caused debt to pile up, not economic growth. In his article, JohnStone said he had ―never actually claimed to be [an economist]‖. Just as well, considering hisarticle‘s poor intellectual content. Dr Frank Shostak ‘s highly instructive The trade balance andthe value of the dollar  — what is the relationship?Demonstrates that if our self-appointed freemarketers paid some attention to what a real economist had to say on the subject the freemarket case would be greatly strengthened.

Did You Know | Factors that affect gold prices in India

Lisa PallaviBarbora

Updated: Mon, May 14 2012. 09 43 PM IST 

Do you know the factors that affect gold prices in India? Other than basic jewellery demand,

where India is the largest consumer, there are two other factors.

International prices 

Gold works on price parity, which means 10g of gold has the same value all over the world,

hence international prices are important.

Hedge: Other than for its ornamental purpose (globally jewellery demand accounts for 70-75%

of overall gold demand), gold has traditionally been used as an investment asset to protect

against political and economic uncertainty. This is because gold is a metal found in pure form

and the value of the metal itself does not change over the years, so it can be used to protect

against any depreciation in other financial assets which happens at times of uncertainty. This is

why historically gold has been used as currency and even though gold is no longer used as a peg

against US dollar, governments still maintain high reserves in the sovereign treasuries. To that

extent, international prices of gold are affected by economic affairs.

For example, if global economic growth is showing an uptrend and financial markets are doing

well, demand for gold as an investment (or hedge) will be low as other assets are more in

demand. Investment demand for gold in good times is curbed by the fact that the asset neither 

gives interest nor dividend income and its appeal is just as a store of value.

Dollar dynamics: Moreover, gold is used as a hedge against movement in the US dollar 

(acclaimed as the global currency for trade), which means typically gold prices move inversely

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to change in strength or value of dollar. Traders in this commodity consider this aspect seriously

while taking positions in gold.

Exchange-traded funds (ETFs): Globally, demand for ETFs has increased. Typically, funds are

required to maintain the value of ETFs sold in the form of physical gold, driving up overall

demand.Indian rupee versus US dollar 

All commodities are generally traded in US dollars. According to the latest World Gold Council

report for 2011, India is the largest consumer of gold; in 2011 we consumed (jewellery and

investment demand) around 933 tonnes of gold compared with global consumption of 4,067

tonnes. However, out of a supply of 1,037 tonnes available in India in 2011, we imported 969

tonnes. Given that imported gold is valued in dollars and then later converted to a rupee value for 

domestic consumption, the rupee-dollar exchange rate is important in determining domestic gold

 prices.

That is why even though international gold prices have corrected in the last two-three months,domestic gold prices have increased. This is because the rupee has depreciated around 8%

against the dollar since February this year. That means Indian consumers have to pay roughly

that much more (other than duties and taxes imposed locally) to buy gold. If you were to sell the

same 10g of gold you buy (in India) in the US, the price you get will be the international price

which is lower than the Indian price. As of now, experts feel that for domestic prices, the rupee-

dollar equation will be the greater determinant.

Dollar Decline or Dollar Collapse?

By Kimberly Amadeo, About.com Guide

What are the reasons why the U.S. dollar is declining? Will it hurt or help the U.S. economy? Isit enough to cause a complete collapse of the dollar, as many are warning? Most importantly,what can you do do protect your financial well-being?The dollar declines when it loses value in relationship to foreign currencies. When this happens,the dollar can buy fewer foreign goods, increasing the price for imports and causing inflation. Inaddition, investors in U.S. Treasury bonds will sell their dollar-denominated holdings.  March 28, 2011 - Despite a $250 billion rebuilding cost, Japan doesn't need to sell its U.S.

Treasury holdings to reconstruct after its earthquake/tsunami/nuclear disaster.  October 25, 2010 - G-20 Meeting Drives Stocks Up, Dollar Down  June 21, 2010 - Is the Dollar Losing Its Grip?  October 22, 2009 - Will Plummeting Dollar Drive Up Oil Prices?  October 12, 2009 - Central Bank Stampede Drives Down Dollar   September 30, 2009 - World Bank Head Calls for New Global Currency  September 23, 2009 - Could a Dollar Decline Drive Dow to 14,000 in 2010?

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  August 25, 2009 - How Much of Dow Rally Is Due to Dollar Decline?  April 30, 2009 - Could a World Currency Replace the Dollar?  June 21, 2009When the Dollar Declines Should You Buy Gold>  March 13, 2009 - Is China Threatening to Sell U.S. Treasuries?

Background

In 2008, the U.S. current account deficit was $700 billion. Over half of the current accountdeficitis owed to foreign countries and hedge funds. (Source: U.S. Treasury Dept.) Partly as a result of this deficit, the dollar declined 40% between 2002-2008. The dollar strengthened during the recession, as investors sought a relatively safe haven. Since March 2009,however, the dollar has resumed its decline. This is a result of the $14 trillion U.S. debt. Creditor nations, like China and Japan worry that the U.S. government won't really support the value of dollar. Why not? A weaker dollar means that the deficit will not cost the government as much to pay back. Creditor have been gradually changing their assets to other currencies to stem their losses. Many fear that this could turn into a run on the dollar. This would quickly erode the value

of your U.S. investments, while increasing inflation.(See Could U.S. Lose Triple AAA DebtRating?) 

How the Rupee movement affects markets

Ashish Gupta, ET Bureau

Feb 19, 2012, 07.22AM IST

The rupee movement has a significant impact on the bottom lines of corporates. The recent

results declared by companies have confirmed this. Last year, due to various reasons, the rupeedepreciated significantly. The depreciation in the currency helped bolster the rupee earnings of IT companies. The rupee lost 16 per cent of its value in 2011 and hit a low of Rs 54.30 againstthe US dollar in December 2011.Due to the positive economic data in the recent past and foreigninstitutional investor (FII) inflows, the rupee is now strengthening. With the currency nowstrengthening, the revenues of export-oriented companies could be negatively impacted in thenear term.A weak rupee meant the rupee revenue grew much higher as compared to thecorresponding dollar revenue growth. Similarly, a depreciation in value helps expand margins.This is because in case of rupee depreciation, the value of the rupee decreases vis-a-vis the USdollar. As such, you get more rupees for a dollar. As the overseas billings may by in dollar terms,the growth in dollar terms may be negligible. However, because of the value depreciation , incase of conversion of the dollar revenue into rupees, there will be significant increases. Thisincrease, in real terms, is due to the currency movement effect. It does not represent real growthin the business. This also applies to import-sensitive companies. Companies with higher importdependence had to suffer because of the rupee decline. They had to shell out more rupees, eventhough the dollar cost may have remained the same. As normally , companies do not go for a 100 per cent hedging option, all the unhedged exposures had to be met at the prevailing higher rates.This also applies to companies with a high proportion of foreign exchange borrowings . Theyhave to service the debt and also repay the loans. In the past, as overseas borrowing was cheaper 

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than domestic borrowing, many companies opted for these instruments. One of the maininstruments was the foreign currency convertible bond (FCCB). This is a foreign currency bondissued by a domestic company to foreign investors. These are listed on foreign stock exchanges.On maturity of the bond, the holder has the option to either redeem the bond or get it convertedto equity shares at a pre-determined price.However, the fall in stock prices has changed the story.

Many of these scrips are ruling below the conversion prices. As such, investors would opt for redemption rather than conversion.As most of these liabilities were not hedged, companies wereforced to report marked-to-market losses. A weak rupee raised costs for these companies as theyhad to pay back their bond-holders in foreign currency instead of converting the value intoshares. So, investors need to track the forex exposures of companies , before deciding oninvesting in them. A higher unhedgedforex exposure can be a risky proposition. It is not only the proportion of revenue between rupee and dollar that matters. You also need to see how thecapital of the company is built - whether it has a higher proportion of forexbonds in the capitalstructure.The share prices of such stocks are affected by these facts. The valuation of acompany's stock takes into account the forex risks as well because they have a substantial impacton the bottomlines of companies.

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Objective:- 

  To know about the reasons of the collapse of dollar value.

 To find out and its impact of indian economy.

  To study about the trade of.

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RESEARCH METHODOLOGY 

Research is composed of two syllables, a pre fixre 

and a verbsearch 

means again, a new, over again.

Research means to examine closely and carefully, to test and try, to probe.

The two words form a noun to describe a careful and systematic study in some field of 

Knowledge, undertaken to establish facts or principles. Research is an organized and systematic

way of finding answers to questions. Redman and Mory defines research as a ―Systematized

effort to gain new knowledge‖. It may be noted, in the planning and development, that the

significance of research lies in its quality and not in quantity. Research methodology is the

specification of method of accruing the information needed to structure or solve at hand. It is not

concerned to decision of the fact, but also building up to data knowledge and to discover the new

facts involved through the process of dynamic change in the society.

PURPOSE OF STUDY

The main aim of this research study is to analyze the collapse of dollar value& its

impactinindia.The pattern of dollar value is bullish & down & its impact in india.

RESEARCH DESIGN: Exploratory in nature

SOURCE OF INFORMATION

COLLECTION OF DATA

PRIMARY SOURCES SECONDARY SOURCES

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MONTHLY PRICE OF DOLLAR 2011 TO 2013

DATE PRICEApril 29, 2011  46.955

May 31,2011 44.935

June 30, 2011 44.8225

July30,2011 44.47

Aug 31, 2011 45.44

Sep 30, 2011 47.245

Oct 31, 2011 49.0925

 Nov 30, 2011 50.6125

Dec 30, 2011 51.89

Jan 30, 2012 51.326

Feb 28,2012 49.155

Mar 31, 2012 50.24April 29, 2012  51.704

May 31,2012 54.29

June 30, 2012 56.08

July30, 2012 55.54

Aug 31, 2012 55.51

Sep 30, 2012 54.57

Oct 31, 2012 53.19

 Nov 30, 2012 54.98

Dec 30, 2012 54.71Jan 30, 2013 54.335

Feb 28,2013 54.345

Mar 31, 2013 54.4

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MONTHLY PRICE OF INFLATION:

DATE INFLATIONApril 29, 2011  9.68

May 31,2011 9.74

June 30, 2011 9.56

July30,2011 9.51

Aug 31, 2011 9.36

Sep 30, 2011 9.78

Oct 31, 2011 10.00

 Nov 30, 2011 9.87

Dec 30, 2011 9.46

Jan 30, 2012 7.74

Feb 28,2012 7.23

Mar 31, 2012 7.56April 29, 2012  7.69

May 31,2012 7.5

June 30, 2012 7.55

July30, 2012 7.58

Aug 31, 2012 6.87

Sep 30, 2012 7.55

Oct 31, 2012 8.07

 Nov 30, 2012 7.45

Dec 30, 2012 7.24Jan 30, 2013 7.18

Feb 28,2013 6.62

Mar 31, 2013 6.84

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CORRELATION IN DOLLAR & INFLATION

X X X2

Y y Y2

xy

46.955 -4.749 22.553 9.68 1.99 3.9601 -9.45051

44.935 -6.769 2019.154 9.74 2.05 4.2025 -13.8765

44.823 -6.8815 2009.057 9.56 1.87 3.4969 -12.8684

44.47 -7.234 1977.581 9.51 1.82 3.3124 -13.1659

45.44 -6.264 2232.09 9.36 1.67 2.7889 -10.4609

47.245 -4.459 2232.09 9.78 2.09 4.3681 -9.31931

49.093 -2.6115 2410.074 10 2.31 5.3361 -6.03257

50.613 -1.0915 2561.625 9.87 2.18 4.7524 -2.37947

51.89 0.186 2692.572 9.46 1.77 3.1329 0.32922

51.326 -0.378 2634.358 7.74 0.05 0.0025 -0.0189

49.155 -2.549 2416.214 7.23 -0.46 0.2116 1.17254

50.24 -1.464 2524.058 7.56 -0.13 0.0169 0.19032

51.704 0 2673.304 7.69 0 0 0

54.29 2.586 2947.404 7.5 -0.19 0.0361 -0.49134

56.08 4.376 3144.966 7.55 -0.14 0.0196 -0.61264

55.54 3.836 3084.692 7.58 -0.11 0.0121 -0.42196

55.51 3.806 3081.36 6.87 -0.82 0.6724 -6.03257

54.57 2.866 2977.885 7.55 -0.14 0.0196 -0.40124

53.19 1.486 2829.176 8.07 0.38 0.1444 0.56468

54.98 3.276 3022.8 7.45 -0.24 0.0576 -0.78624

54.71 3.006 2993.184 7.24 -0.45 0.2025 -1.3527

54.335 2.631 2952.292 7.18 -0.51 0.2601 -1.34181

54.345 2.641 2953.379 6.62 -1.07 1.1449 -2.82587

54.4 2.696 2959.36 6.84 -0.85 0.7225 -2.2916

1229.838

61351.23

197.6338.8731 -91.8736

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X= X

N

= 1229.838/24

= 51.24

Y = Y

N

=197.63/24

=80.23

r= xy

x2*y2

 

= -91.8736

61351.23*38.8731

= -91.8736/1544.31

= -0.059

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REGRESSION OF DOLLAR VS INFLATION

X Y x2 y2 XY

46.955 9.68 2204.772 93.7024 454.5244

44.935 9.74 2019.154 94.8676 437.6669

44.823 9.56 2009.101 91.3936 428.5079

44.47 9.51 1977.581 90.4401 422.9097

45.44 9.36 2064.794 87.6096 425.3184

47.245 9.78 2232.09 95.6484 462.0561

49.093 10 2410.123 100 490.93

50.613 9.87 2561.676 97.4169 499.550351.89 9.46 2692.572 89.4916 490.8794

51.326 7.74 2634.358 59.9076 397.2632

49.155 7.23 2416.214 52.2729 355.3907

50.24 7.56 2524.058 57.1536 379.8144

51.704 7.69 2673.304 59.1361 397.6038

54.29 7.5 2947.404 56.25 407.175

56.08 7.55 3144.966 57.0025 423.404

55.54 7.58 3084.692 57.4564 420.9932

55.51 6.87 3081.36 47.1969 381.3537

54.57 7.55 2977.885 57.0025 412.0035

53.19 8.07 2829.176 65.1249 429.2433

54.98 7.45 3022.8 55.5025 409.601

54.71 7.24 6838.75 52.4176 396.1004

54.335 7.18 2952.292 51.5524 390.1253

54.345 6.62 2953.379 43.8244 359.7639

54.4 6.84 2959.36 46.7856 372.096

1229.838 197.63 67211.86 1659.156 10044.27

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Y on X ∑ Y = Na + b∑ X

∑ XY = a ∑X + b∑ X2

A -4135285.14

B -80698.95

X on Y ∑ X = Na + b∑ Y

∑ XY = a ∑Y + b∑ Y2

A 27452.53

B -3327.58

GROSS DOMESTIC PRODUCT VALUE

In the fourth quarter of 2012, India's economy grew only 4.5 percent due to the widespread

weakness in farm, mining and manufacturing output. 

Manufacturing output grew only 2.5 percent, while the mining sector reported an annual fall of 1.4 percent. Farm output gained 1.1 percent. The construction output expanded 5.8 percent andfinancing, insurance, real estate and business services grew 7.9 percent.

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CORRELATION BETWEEN GDP V/S INFLATION 2011 TO 2012

TIME INFLATION GDP

2011 Sep 9.78 7.8

2012 mar 7.5 6.9

17.28 14.7

X = ∑ X/2

=8.64

Y =∑Y/2

=7.35

r = xy

 x2*y2 

= 0.208

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CORRELATION BETWEEN IFLATION V/S GDP IN 2012 TO 2013

TIME INFLATION GDP

2012 Sep 7.55 5.3

2013 sep 6.84 4.5

14.39 9.8

X = ∑ X/2

=7.19Y =  ∑Y/2

= 4.9

r = xy

 x2*y2 

= +1

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CORRELATION BETWEEN EXPORTS V/S DOLLAR 

x x x2 Y Y Y2 XY

1368.57 109.77 12049.45 46.955 -4.286 18.3698 -470.474

1041.51 -217.29 47214.94 44.935 -6.306 39.76564 1370.231

1190.98 -67.82 4599.552 44.823 -6.418 41.19072 435.2688

1190.39 -68.41 4679.928 44.47 -6.771 45.84644 463.2041

1173.8 -85 7225 45.44 -5.801 33.6516 493.085

1121.48 -137.32 18856.78 47.245 -3.996 15.96802 548.73071265.2 6.4 40.96 49.093 -2.148 4.613904 -13.7472

1164.06 -94.74 8975.668 50.613 -0.628 0.394384 59.49672

1135.2 -123.6 15276.96 51.89 0.649 0.421201 -80.2164

1289.51 30.71 943.1041 51.326 0.085 0.007225 2.61035

1299.44 40.64 1651.61 49.155 -2.086 4.351396 -84.775

1217.34 -41.46 1718.932 50.24 -1.001 1.002001 41.50146

1421.73 162.93 26546.18 51.704 0.463 0.214369 75.43659

1216.9 -41.9 1755.61 54.29 3.049 9.296401 -127.753

1347.53 88.73 7873.013 56.08 4.839 23.41592 429.3645

1390.13 131.33 17247.57 55.54 4.299 18.4814 564.5877

1261.53 2.73 7.4529 55.51 4.269 18.22436 11.65437

1215.4 -43.4 1883.56 54.57 3.329 11.08224 -144.479

1302.14 43.34 1878.356 53.19 1.949 3.798601 84.46966

1215.63 -43.17 1863.649 54.98 3.739 13.98012 -161.413

1221.48 -37.32 1392.782 54.71 3.469 12.03396 -129.463

1359.5 100.7 10140.49 54.335 3.094 9.572836 311.5658

1389.82 131.02 17166.24 54.345 3.104 9.634816 406.6861

1412.06 153.26 23488.63 54.4 3.159 9.979281 484.1483

30211.33 1229.838 4569.72057

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X = ∑ X/2

= 1258.79

Y =  ∑Y/2

=51.243

r = xy

x2*y

2 

= 4569.72

√345.29*234476.4 

=0.507

Introduction

The probable error of the coefficient of correlation helps in interpreting its value. With the help

of probable error it is possible to determine the reliability of the value of the coefficient in so far 

as it depends on the conditions of random sampling. The probable error of the coefficient of 

correlation is obtained as follows:

P.E = 0.6745 1-r 2 

 N

=0.6745 1-0.257049

408989

= 0.6391

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INTERPRETATION:

Where r is the coefficient of correlation and N the number of pairs of observations.

  If the value of r is less than the probable error there is no evidence of correlation, i.e the

value of r is not at all significant.

  If the value of r is more than six times the probable error, the coefficient of correlation is

 practically certain, i.e the value of r is significant.

  By adding and subtracting the value of probable error from the coefficient of correlation

we get respectively the upper and lower limits with in which coefficient in the population

can be expected to lie. Symbolically

 p = r + P.E

Where p denotes correlation in the population.

Let us compute probable error, assuming a coefficient of correlation of 0.507and a

sampleof pairs of items . we will have

=0.6745 1-0.257049

408989

= 0.6391

The limits of the correlation in the population would be p = r + P.E

i.e., 0.507+0.6391

instances are quite comman where in acorrelation coefficient of 0.5 or even or even 0.4is

obviously considered to be a fairly high degree of correlation by a writer or researcher worker.

Yet a correlation coefficient of 0.5 means thet only 25% of variation is explained. A correlation

coefficient of 0.4 ,means that only 16% of variation is explained.

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STANDARD ERROR 

If 0.6745 is omitted from the formula of probable error, we get the standard error , we get the

standard error of the coefficient of correlation. The standard error of r therefore is :

S.E.r = 1-r 

2

 

 N 

= 1-0.257049/4.8989

=0.151

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CORRELATION BETWEEN IMPORTS VS DOLLAR 

x  Y x x2 y y2 xy

1541.72 46.955 -516.81 267092.6 -4.285 18.36123 2214.531

1623.96 44.935 -434.57 188851.1 -6.305 39.75303 2739.964

2033.63 44.823 -24.9 620.01 -6.417 41.17789 159.7833

1833.21 44.47 -225.32 50769.1 -6.77 45.8329 1525.416

1825.82 45.44 -232.71 54153.94 -5.8 33.64 1349.718

1810.46 47.245 -248.07 61538.72 -3.995 15.96003 991.0397

1893.72 49.093 -164.81 27162.34 -2.147 4.609609 353.8471

2028.02 50.613 -30.51 930.8601 -0.627 0.393129 19.12977

1988.61 51.89 -69.92 4888.806 0.65 0.4225 -45.448

2094.05 51.326 35.52 1261.67 0.086 0.007396 3.05472

2209.13 49.155 150.6 22680.36 -2.085 4.347225 -314.001

1963.63 50.24 -94.9 9006.01 -1 1 94.9

2129.92 51.704 71.39 5096.532 0.464 0.215296 33.12496

1923.02 54.29 -135.51 18362.96 3.05 9.3025 -413.306

2218.14 56.08 159.61 25475.35 4.84 23.4256 772.5124

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X = ∑ X/2

= 2058.53291Y =  ∑Y/2

=51.243

r = xy

 x2*y2 

= 15145.88 

√1248026*345.2968

= 0.729

2004.53 55.54 -54 2916 4.3 18.49 -232.2

2250.8 55.51 192.27 36967.75 4.27 18.2329 820.9929

2078.59 54.57 20.06 402.4036 3.33 11.0889 66.7998

2282.61 53.19 224.08 50211.85 1.95 3.8025 436.956

2377.59 54.98 319.06 101799.3 3.74 13.9876 1193.2842277.96 54.71 219.43 48149.52 3.47 12.0409 761.4221

2325.24 54.335 266.71 71134.22 3.095 9.579025 825.4674

2475.94 54.345 417.41 174231.1 3.105 9.641025 1296.058

2214.49 54.4 155.96 24323.52 3.16 9.9856 492.8336

49404.79 1229.838 1248026 345.2968 15145.88

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THE PROBABLE ERROR OF A MEAN

Introduction

The probable error of the coefficient of correlation helps in interpreting its value. With the help

of probable error it is possible to determine the reliability of the value of the coefficient in so far 

as it depends on the conditions of random sampling. The probable error of the coefficient of 

correlation is obtained as follows:

P.E = 0.6745 1-r 2 

 N

=0.6745 1-0.257049

408989

= 0.6391

INTERPRETATION:

Where r is the coefficient of correlation and N the number of pairs of observations.

  If the value of r is less then the probable error there is no evidence of correlation, i.e the

value of r is not at all significant.

  If the value of r is more than six times the probable error, the coefficient of correlation is

 practically certain, i.e the value of r is significant .

  By addingand subdracting the value of probable error from the coefficient of correlation

we get respectively the upper and lower limits with in which coefficient in the population

can be expected to lie. Symbolically

 p = r + P.E

where p denotes correlation in the population.

Let us compute probable error, assuming a coefficient of correlation of 0.729 and a

sample of pairs of items . we will have

=0.6745 1- 0.5314

408989

= 1.14575

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The limits of the correlation in the population would be p = r + P.E

i.e., 0.507+0.6391

instances are quite comman where in acorrelation coefficient of 0.5 or even or even 0.4is

obviously considered to be a fairly high degree of correlation by a writer or researcher worker.Yet a correlation coefficient of 0.5 means thet only 25% of variation is explained. A correlation

coefficient of 0.4 ,means that only 16% of variation is explained.

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BIBLIOGRAPHY:-

http://evilspeculator.com/?p=28994 

http://theeconomiccollapseblog.com/archives/qe3-helicopter-ben-bernanke-makes-it-rain-money 

http://useconomy.about.com/od/inflation/i/dollar_decline.htm 

http://useconomy.about.com/u/ua/tradepolicy/Dollar_Impact.htm 

http://en.wikipedia.org/wiki/Plaza_Accord 

http://useconomy.about.com/od/inflation/i/dollar_decline.htm

http://www.tradingeconomics.com/india/imports 

http://www.tradingeconomics.com/india/exports