What is capital account convertibility

Assignment Help Financial Management

Reference no: EM131314528

Prime Minister Dr Singh is right in advocating a phased movement to fall convertibility starting with Special Economic Zones (SEZs), we need to move along the convertibility highway, even if slowly. Our Economy is in take off stage and needs timely infusions of fixed and working capital. Since India is now an enterprise driven economy like most others, the Rupee needs to become more convertible to reduce transaction costs. Fears of a Recurrence of the 1991 crisis, when our reserves were insufficient to finance 3 weeks imports are perhaps exaggerated. The currency has been ruling at below 47 to a dollar for the last 6 months. Investors and rating agencies are convinced that the India’s growth story is here to stay. Their views determine flows of FDI & FPI in a big way. Current Account transactions no longer influence a country’s BoP profile to the extent they did a couples of decades ago. Despite a ballooning trade deficit, our reserves have steadily increased over the years to 144 billion dollars.

Question :

1) Current Account Transactions no longer influence a country’s B.O.P. Discuss.

2) What is Capital Account Convertibility?

3) What are the risks in Capital Account Convertibility in Indian context?

4) What is the present status of Capital Account Convertibility in India?

Reference no: EM131314528

Questions Cloud

Identify the specific goals and challenges of the model : Identify the specific goals and challenges of the model.Use specific examples from case studies to support your critique.Do you feel that the model is an effective approach to the criminal justice system? Why or why not?Identify specific research fin..

Develop an expression for x : An upward buoyant force F is required to shut the ballcock valve. The density of water is designated ρw. Develop an expression for x, the fraction of the float submerged, in terms of R, ρ, F, g, and ρw.

What is the profitability of this bio-diesel : Tata Chemicals, leading manufacturer of Caustic Soda in the country said today that it had bought a 35 per cent stake in JOIL Pte, a Singapore based jatropha seeding company. The stake buy will help the firm gain exclusive marketing rights for techno..

Why is leadership important for lawyers : Briefly describe three of the styles of leadership as discussed by Daniel Goleman in his article on emotional intelligence.What did Nick Petrie say about the future of leadership abilities by lawyers that are developed through "vertical developme..

What is capital account convertibility : Prime Minister Dr Singh is right in advocating a phased movement to fall convertibility starting with Special Economic Zones (SEZs), we need to move along the convertibility highway, even if slowly. Our Economy is in take off stage and needs timely i..

What moment m is required to hold the cube : What moment M is required to hold the cube in the position shown? The right-hand edge of the block is flush with the water.

Decides to issue debt to finance the purchase : Stephenson Real Estate Company was founded 25 years ago by the current CEO, Robert Stephenson. The company purchases real estate, including land and buildings, and rents the property to tenants. Suppose Stephenson decides to issue debt to finance the..

Concentrate on agricultural pricing policies : There is nothing we can do about them except to send food relief after they occur. Explain why that position is inaccurate. Concentrate on agricultural pricing policies and distributional issues.

Determine the component of the velocity : The velocity vector in a two-dimensional flow is given by the expression v = 10ex + 7xey m/s when x is measured in meters. Determine the component of the velocity that makes a 30° angle with the x axis at the point (2, 2).

User Account

All Pages