Strange, in Pakistan it's the opposite Govt issued Rs. 5000 note which is equal to INR 3171 because otherwise people were using USD 100 bills .... and only making USD stronger locally.. I still don't get how they are going to keep big guys from keeping USD $100 ... I would keep an eye on USD vs INR in coming weeks
India's demonetisation of Rs. 500 and Rs. 1000 notes
131–140 of 336 posts
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#132Earlier quoted context omitted.
> 1 USD is ~Rs 66. That is a staggering difference in purchasing power! How on earth do you derive purchasing power from comparison of arbitrary units? ~Rs 1 does not have the purchasing power of 1 USD,. 1 Zimbabwean dollar does not have the purcahsing power of 1 GBP.
The grandparent comment wasn't comparing arbitrary units, they were comparing the units of each country's currency denominations. The largest active legal tender in the US is worth $100 while the largest in India was worth $15 (now will be $30). I think it is a fair assumption that those numbers aren't arbitrary and that some thought went into choosing those denominations. That gives you insight into the economies of…
Largest banknote in UK is £50, largest in EU is €500. That does not imply a staggering difference in purchasing power between £ and €.
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#133All the black money is in gold, dollars & euro ! or at the swiss banks. This is not going to smoke out the big players in this game.
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#134500 and 1000 Ruppee note cease to be legal tender as of today midnight. Everyone who has them can get it exchanged for 100 ruppee notes in banks,post offices etc until Dec 31. You need to provide a valid id to do an exchange, which means that the transaction will be traceable and Income Tax department (Indian version of IRS) will be matching them to declared income. ATM and banks are closed for the next couple of days.
Essentially people hoarding black money in 500 and 1000 ruppee denomination will be stuck with this money as they can't exchange them. (money obtained via undeclared/not-taxed transactions. One common method is show a lower amount in the legal documents. For example show that land/house is being purchased for 100K$ on documents while paying say 300K $ thereby evading tax on 200K $, but with the side effect making 200K$ black money). This is also slow down spread of fake currency in the country. (Only temporarily until fake of the new notes are created).
Having lived in India for most of my life makes me take a slightly pessimistic view of this measure
+ Small scale hoarders of black money will be affected by this move. + Once you cross a certain wealth, hoarding cash is impractical, so you start investing in land,gold etc. Those people will not be affected by this measure.
+ Average citizen will be inconvenienced. I can see the long lines forming at the banks for the new few days as people scramble to get the notes changed. Not to mention people who are travelling etc, who might be having no money except for the discontinued notes and no way to get more money for the next two days.
+ There will be attempts to circumvent this. I guess there will offers of "exchange x amount and get y % of it" given to middle to low income people in the coming days. But it is hard to scale this, so it wont affect the efficacy of the measure. + I have a hard time believing that the people close to the current Prime Minister / Government didn't know this was going to happen. (If this measure wasn't carefully planned not to affect "friends" of the current administration(look up Adani Group), I would be greatly surprised and will change my opinion about the current Prime Minister)
edit: added one bullet point
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#135All those trees. Sniff.
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#136This is a strategy copied from China. They did same in 1970-80's. Funny part is this is trying to get money from within Indian economy and wasting on govt and pet projects. The promise to re-patriate black money stashed outside India nowhere in sight. China bring in fugitives and money back even from official who took US citizenship. Modi can just dream of it and take money from hardworking Indians living in India. P…
> This is a strategy copied from China. They did same in 1970-80's. Citation needed.
India did this once already . 1978 - all denominations gt than 100 INR were demonetised
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#137Earlier quoted context omitted.
> This is a strategy copied from China. They did same in 1970-80's. Citation needed.
India did this once already . 1978 - all denominations gt than 100 INR were demonetised
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#138What about people not in India with a few 1000 rupee notes lying around, those are valueless for good? I have 2 notes. Wont the funds be effectively destroyed and removed from circulation, for those who don't put their cash in the bank by the end of next month. Wont this have deflationary consequences?
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Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#139This is the boldest and probably most brilliant move by any Indian politician since liberalization of economy in 1990s. Having said that, another way of understanding this is that as of today both old 500 Rs and 1000 Rs notes have been "probabilistically devalued". For anyone in middle class and below the value essentially remains the same (other than a small devaluation due to effort required to get them exchanged),…
Changing $100 notes to $200 notes will open a new black market for converting 2 x $100 notes to $200. I think just removing the $100 note is safer.
Wouldn't it be 4x $100 notes? Why would you take the two $100 notes if you knew they were being devalued?
Re: India's demonetisation of Rs. 500 and Rs. 1000 notes
#140This is quite big. An expert says that 87 percent of all of India's cash reserve is in 500 and 1000 Rupee notes. It might reduce black money. In any case, the next few weeks are going to be interesting. Almost an emergency atmosphere right now in front of ATMs at 11 pm in the night.
source?