Why we can't have roupies outside India ?

joesol

Could you tell mw why it's impossible to have roupies outside of India and why we can't go out from India with roupies ? I am curious ..

R Murli Dhar

Good Question ! Historical mania I guess. You can take Rupees to NEPAL, BHUTAN, but not outside elsewhere. I don't know really, but I guess it because we have hostile neighbors who may/have equipment to fake it.. not that it's not happening. That's just an educated guess or uneducated guess. But you have set me thinking. I will try and find out. Good wishes.

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Nick-H

I don't think it is about faking. No, wait, I think that is maybe one of the aspects: counterfeit cash is a very good way to weaken the economy of a victim country.

But I think it is more about the power that one's currency gives, in the hands of another.

As I'm wring this, I'm thinking about the Chinese having so many US dollars --- and then thinking that I doubt that much of it is in currency notes!

In other words, I'm out of my depth already. Help we need an economist! (I never thought I'd say that!)

joesol

Nice to both of you ..i am waiting ..

R Murli Dhar

I am checking with some economists Sir... just give me some time ! You will get the answers shortly. If I don't post within the next two days (O today is Thursday already here), will certainly post it on Monday/Tuesday coming week. Can someone remind me ? Please ??? Pretty Please??

goangoangone

It's not fully convertible. India has a protected economy and therefore the currency as well.

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R Murli Dhar

1. IS TRUE> IT'S NOT CONVERTIBLE ON THE CAPITAL ACCOUNT, NOT CURRENT ACCOUNT ergo, there's no question of flight of large amounts of capital! Travellers need not bother about the Capital Account. And there's free conversion to INR and vice versa. No more permits required upto a large sum.
2. Not true: India is NOT a protected economy anymore, nor the currency.The economy is free and open, subject to some restrictions, but very minimal now. As for the currency it's a free float, and its value is determined by the value of the basket of currencies, viz. USD, UK Sterling Pound, Euro, and one two more. If you see the business page, you will see short byelines saying whether the rupee went up or down against the dollar!

As I said in my earlier post have posed this question to my economist friends in FICCI elsewhere and also with RBI !

rsk11584

dont know but my relatives usually carry rupees outside india, my sis does, coz when they return not necessary they have all those changes, coins, notes etc. So they might be carrying but not declaring.

Nick-H

But it is still not permitted to carry rupees in or out of the country.

rsk, there being a law, and people even knowing about it, let alone observing it, are very different things, hence there are actually quite a few rupee notes floating around outside India. However, Indian Residents are permitted to carry up to Rs.5,000 in/out of India.

R Murli Dhar

Hey Nick-H, I was replying to a post from goangoangone !! He said India had a 'protected economy' and hence... not an absolute quote.

As for the amount of Rupees carried in and out,you are right about 'risk'. As for the 'why' you can't carry out and bring in, that's the real question. Have posed this query, as I said earlier, to economists and the RBI. Hopefully, I will get an answer! I am curious too... Good wishes.

Nick-H

Yes... I guess it is now just-a-bit protected, with a considerable nod to globalism.

Haylo

I can understand there being a ban on trading the rupee abroad, but I too am curious to understand why it's illegal for tourists to take leftover notes home when they leave India.

Assuming the face value of a bank note is greater than the cost of its production, surely people taking notes as souvenirs would be literally a license to print money for India.

Ditto postage stamps which are bought as collectibles and never used; the country of issue is paid for a range of delivery services without ever having to provide that service.

Anyway, it's good to see an interesting question being posed, where I thought from the thread title that it would be a whiny rant.

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edwardseco

For many years India had a controlled currency regime (a basic topic in International Trade theory). Slowly, it is being adjusted to the market or more accurately a dirty float (pegged float). Where is SKK when you need him anyway? This restriction is greatly eased since when I first travelled to India and will no doubt be eased further with glacial swiftness..

goangoangone

Another way to put it is that the "penalty" for buying imported goods is duty. I think duty on an imported car is something like 150%. This discourages the buyer from selling rupees for dollars or yen for instance. Where is SKK?

R Murli Dhar

Hi, Let me clear your first point: Individuals are not allowed to trade the Indian Rupee; corporates/exporters who import and export are allowed to take positions on the INR/USD or whatever international currency they choose to deal in. NOTE INDIVIDUALS AT THE MOMENT are not allowed. CORPORATE ENTITIES CAN. They have to register with the RBI and are allowed to trade for export/import business on the Current Account, NOT CAPITAL Account. If I remember correctly, every country has fixed amounts of their own currency that can be brought in and taken out. I remember once when travelling into US, due to a very short flight, one of my colleagues forgot to declare US$ being brough in - can't name him - he's a very senior person, and a stickler for rules - forgot to declare the x amount while leaving US for a short Europe trip and returning the next day, he was caught by US customs, and had to show cause why he was in possession of the excess dollars. Similarly the CFO of the same company, lost his currency declaration (his first visit) to Singapore, and while leaving had to face the same problem. So it's not restricted to India alone. The question is why?, How much can be taken in and/or out. It's certainly an interesting thread Relearning what I learnt while in office ! Good wishes to all.