Inflation and Depreciation and the US...

In the sameway, the RBI controls the money supply and the base rates to control domestic inflation and inflation expectations; it may also try to manage the market foreign exchange rate by manipulating supply of the foreign exchange and foreign exchange rate to control imported inflation and inflation expectations since price stability is the primary objective of the monetary policy… which might further reinforce lower prices by reducing inflation and interest rate and expectations which could extend the current economic expansion of the economy…

Inflation and depreciation and expectations are the prime causes of the foreign exchange outflows from the economy leading to further inflation and depreciation and expectations resulting in higher interest rate and expectations and lower investment and growth and expectations…

If the central bank is really serious to abide to the inflation targeting framework, to contain inflation lower than 4%, it may try to provide $s at a calibrated discount rate to the OMCs, as much needed, to reduce the cost and price of oils, which could help reduce inflation and expectations and interest rate and expectations, further reducing cost and prices to increase demand/supply and economic growth and expectations...

Lower prices would increase competitiveness of the economy and exports, too..... It is the objective of the central bank to control inflation and achieve full employment...

Nonetheless, if the RBI provides the foreign exchange at a discount rate through special windows to OMCs it would help contain cost and prices of oil imports and domestic inflation and might increase supply further lowering prices or inflation and interest rate and expectations and increase real wages and domestic demand and growth and expectations…

Lower prices or domestic inflation and interest rate and expectations might also increase the competitiveness of the domestic economy and increase exports through internal devaluation…

If INDIA does not resort to inflation and depreciate to increase exports, but follow to lower inflation and interest rate and contain real wages to increase productivity and competitiveness and exports it does not have to devalue externally, but internally ie internal devaluation...

We cannot expect much depreciation or external devaluation... It would also increase domestic demand... Lower inflation could increase domestic goods and services and currency exchange rate means higher real exchange rate.......

'Higher real interest rates have held back domestic investment even, leave alone exports... I would like to invite Rajan, the former CEA and RBI governor, to comment on higher real interest rate over 3%....' that how higher real interest rate could affect investment and employment and supply and demand and growth…

Lower food inflation in INDIA would increase real wages and demand and growth in the economy at a time when oil prices are betraying, it would help balance price pressure... If this has happened due to higher supply, farmers would sell more at lower prices means higher profits...

They have produced more for which lower prices are a remedy to consume over supply... Lower prices would help correct over supply and increase demand in the economy.... There is nothing like deflation in the agriculture or the economy...

Nonetheless, Government is a big player in the market if it restricts supply it might help contain prices...

Historically.... whenever the stock market has been through big corrections it has also increased more than the previous peak... it is a trend...... This time the stock market could touch 41, 000 to 42, 000 till March 2019 if domestic economy fundamentals remain stable....

The US companies or any country’s industries must understand that protecting their specializations would give them distinct competitive advantage over the long run... Specialization is the center piece of the theory of international trade and the theory of competitive advantage and comparative advantage...

In the veil of sanctions on Iran and Venezuela Trump is protecting its (US) Shale industry... It was widely expected that the Shale industry would bind the oil prices from increasing too much, but it has not... It is now a net exporter of oil which is also benefiting from higher oil prices.....