American Company Expanding to a Term Paper

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Also, opening of exports to foreign markets would improve the balance of payments of the country and increase the revenues for the economic entities involved in export activities. Removing the important constraints would also improve the life conditions of ordinary citizens, offering them a large variety of products at superior quality. The estimates in the economic forum present India as a new force in the international market, so when the market, both commercial and financial, would be fully liberalized, both the Indian people and the international investors seeking new business opportunities will have to win from this situation.

IV. Foreign exchange market

The national currency of India is the Rupee, with the 1000 value as the highest printed denomination and the currency with the lowest value is the 25 paise coin. The majority of the Rupee banknotes present the former political leader and opinion formant, Ghandi. The value and the policy of the Rupee is set and monitored by the National Bank, through different direct and indirect measures of monetary policy - reserve level, discount rate, etc. Due to the commercial transaction with its neighbours, Indian national currency is accepted both in Nepal and Bhutan. In the past the national currency was connected and pegged to the British pound and the silver. Due to issues of liquidity and monetary stability and fluctuating exchange rates, but the Rupee is now a fully convertible currency. Thanks to the favorable economic predictions for the commercial future, the role of Rupee will increase on the international monetary market, due to the high demand for this type of currency.

Inflation is another target of the National Bank. First of all, inflation is a negative economic phenomenon that influences the purchasing power of citizens and commercial companies.

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Although the inflation ended up to in a one figure value at the end of 2006, nowadays is at around 5.4%, economic commentors are skeptical about the Indian inflation kept at a stable pace. The main problem for the inflation stability is the commercial excedent, resulted from the fact the national exports exceed to a large extent the products imported in the country. In many fields of activity, like software programming or manufacturing Indian corporations are in a very competitive position, offering them many advantages against the other companies on the market. The additional amount of money will increase the monetary supply, offering incentives for the inflation surge.

In this paragraph we will discuss the evolution of the exchange rate values for the Indian Rupee and the American Dollar. The table presented above conveys the image of the Indian national currency against the most traded currency at the international level. The first year of analysis is 1970, while the final year included in our presentation is 2007. As we can see from the appendix, starting with 1997 the Rupee registered an upward trend up to the year 2006. The depreciation in the value of the Indian Rupee, in the period 1997-2006 was of approximately 25%. However, in the year 2007, the trend seems to be reversed, as the Indian Rupee appreciated in nominal terms against the American Dollars. This most recent trend has discouraged the national exports, making the imports more cheaper in the eyes of ordinary citizens.

Value of one Rupee (units per U.S.$).....

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