Death of retail forex

A story of Forex, currency conversion, rupee depreciation, inflation, subsidies etc. Again in the death of retail forex memories of Dev Anand. I’m writing this story so that the newcomers can get some idea about Forex, currency conversion, rupee depreciation, inflation, subsidies etc.

Investor: Faith won and lost Enter an American Mr. Thanks to American recession, he decides to invest outside USA, and comes to India with a bag full of green dollars, after he was assured by RBI and Commerce Secretary that environment in India is very conductive for business. Please come, give us your dollars, we convert it into rupees. Now James searches for land to open office or factory somewhere near a big city in India.

But price of land is so high thanks to the black money, it doesn’t make any sense buying a property. I’ll starting a small-scale i-phone production company. But the electricity shuts down at random, for hours and days. James: ok, I’ll buy a diesel generator like every other industrialist in this area. Again price of Diesel also increasing, Profit margin shrinking. Adding insult to the injury, his workers have gone on strike. Meanwhile the factory remains closed for weeks and months together.

James: let me start a coffee house to pay lawyers’ fees. Add the bribe he has to pay to local goons, policemen, and municipality  corporators. If he raises the selling price of each cup, there will be drastic reduction in customers. Again Hardly any profit margin left. Bandh day’ and he is beaten up severely by the political goons, his coffeeshop is ransacked while police watches silently. His calls his buddy Allen in America, cautions him not to invest in India.

At the local beer-bar in California, Allen overhears some conversation between drunkards that soon IMF and world bank will give big financial aid to the ailing Greek and Portugal, and their economies will be back on right track. Allen immediately runs to Forex market, with his bag full of dollars to get them converted into Euro. Forex market, with a suitcase full of rupees. King of Saudi doesn’t accept payment in Rupees for the crude oil sold.