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POSTED BY ON February 26, 2011 4:38 am ONE COMMENT
Few years back, Dollar was available at above Rs.50 , that means any item available at 1 Dollar was availabale for say Rs.55 . Nowadays Rupee has appriciated and Dollar is available around Rs.45, then the same item should be available at Rs.45 only. Instead of this the cost of the item is in multiple in India.
Has the Rupee appriciated in true sence ?
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Any kind of appreciation/depreciation is a relative measurement. It is like asking if you are driving car at 40 kmph, then is your speed higher? The speed comparison can only be done relative to another speed parameter.
Also if rupee is appreciated w.r.t dollar do not have a direct proportional relation with cost of items in India. The purchasing power of rupee is not directly governed by dollar-rupee exchange rate (there are so many other factors). As an example think of the recent onion price rise, but the dollar-rupee exchange rate did not had a similar spike.
There is something called purchasing power parity (http://en.wikipedia.org/wiki/Purchasing_power_parity) which is useful to calculate the price of the same items in different countries. Check it out.
Not sure if I answered your question though 🙂
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