"Why does dollar price go up and down?". He explained me the reason. I am going to simplify same explaination here.
Lets assume there are only two international traders between India and US.
- Mr Patel in Mumbai who supplies Diamond Jewelry to a store in New York.
- Mr. Brown in Chicago who supplies Industrial Robots in Noida.
Assume dollar price today is 45 rupees.
Today Patel sold 10 piece Jewelry set to NY store, cost of each piece was 1000 dollars. Total selling amount = 10,000 dollars. Now Patel wants to convert 10,000 dollars to Rupees. If rate is 45 rupees to 1 US dollar. After conversion Patel should get 4.5 Lakh rupees.
Same evening Mr. Brown from Chicago, sells one industrial robot in Noida for Rs. 2.25 lakhs. As per 45 rupees to dollar rate, Brown is expecting to convert Rs. 2.25 lakhs to 5000 US dollars.
So we have
-- 10,000 US dollars to be converted to rupees. [After conversion worth Rs. 4.5 Lakhs]
-- Rs. 2.25 Lakhs to be converted to dollars [After conversion worth 5000 US dollars]
We have a problem. Demand for Rupees is more than that for dollars. In other words for this particular trading day, there seems to be more supply of dollars than that of rupees.
Patel and Brown log to Foreign Exchange website to convert their currency.
First 5000 dollars gets exchanged easily. And the rate is Rs. 45 to 1 US dollars. Brown is happy he got his 2.25 lakhs converted to 5000 US dollars, he logs out of website and goes home. Patel still has more 5000 US dollars to convert in to Rupees. He got some money on credit from a friend and promised to return him on time with small interest fee. Patel also wants to pay salary to karigar (people on manufacturing floor) who manufactured jewelry for him.
Patel is now desperate to convert remaining 5000 dollars to rupees.
Lets add one more character in to story now.
Mr Desai who runs a Travel Agency and organises tours to countries like UK, USA, Asia etc. He logs to website and sees someone waiting to exchange 5000 US dollars to rupees. Desai knows that he will need US dollars sometime next month and was looking to buy some at good price. He offers a bargain. Last price for dollar was 45 rupees, but if someone sells dollars for 43 rupees, I will buy it.
Patel being in rush, agrees to sell dollars for lower price. Patel converts remaining 5000 US dollars at rate of 43 rupees. 5000 x 43 = 2.15 lakhs. Patel doesn't mind loosing small amount because he will able to make payments on time.
Now latest Exchange rate is: Rs. 43 to 1 US dollar.
After few weeks , Desai (Travel agent) gets a big contract to organise tour for a group of 100 people. He needs lot of dollars, he logs in to website and sees Patel ready to sell 10,000 dollars for 47 rupees. Desai desperately needs dollars, he buys it.
Now excahnge rate is: Rs. 47 to 1 US dollar.
demand $ k badaney k pichey multinational brands ka Sabse bada hath hai ....jaise coke yearly 7-10k crore ka profit India se baahar lejata hai..or usko payment $mein chahiey na k Indian currency mein...aise he tabaco ki company hai ek ..vo ab tak 3lakh crore ka profit bna kar India se baahar lejaa chuki hai in $... similarly 7000 multinational companies hai India mein jo Lakho crore ka profit Indian economy se nikalkar baahar lejati hai.... or ham Indians Jane anjaney in companies ka maal kharid kar apney he desh Ko angrezo Ko bech Rahe hai...because aise 10 saal approx or chalta Raha to apni economy collapse kar jaegi...kyuki apni sarkaar ko udhar Lena padta hai in *** se...apna Desh chalaney k ley kyuki inko companies Ko bhaganey ka dum to hai nai gov k paas ...rules aise he bananey hai baahar k desho ne Karz dete waqt India Ko...that u can't stop us to sell in India..ham Janta k paas he bas yeh power hai k Swadeshi apnao or in angrezi companies ki maa ***
Once you stop importing you don't need dollars to buy or sell.
Simple funda is, country's economy is weak that's why it fluctuates. Look at Dubai or Saudi, their currency never goes up or down which helps in stable business.
fuck his explanation, what if take some other values and some other numericals apart from what he has taken. just for exchanging his 2.5L to john the company has to give him $5000 so dollar rate is equal to ₹50 fuck that explanation. Lol that is not true . guys go for other video .
Mallikarjuna Vallabhaneni this is not applicable to the Indian market sir a weak currency favours India, as we are a nation dependent mostly on exports hence it helps us to capitalise markets as we can offer goods at a cheaper price as compared to nations with stronger currencies.
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