Mr. Modi: Econ secretary explanation does not hold water

There are more factors at work, affecting the value of the rupee - the Turkish Lira is a red herring and Modi should get to the bottom of it

There are more factors at work, affecting the value of the rupee - the Turkish Lira is a red herring and Modi should get to the bottom of it
There are more factors at work, affecting the value of the rupee - the Turkish Lira is a red herring and Modi should get to the bottom of it

An Open Letter to Prime Minister Modi

Dear Prime Minister Modi –

It was good to hear the clarification from the Economic Affairs Secretary about the falling value of the Rupee vis-à-vis the dollar. But I disagree with his observation that the fall in the value of the Rupee is due to global factors. Here is why:

  1. India is the fastest growing economy this year and just finished a stellar increase of 14.3% in its exports in the month of July. If there is a bright spot in the whole world, it is India.
  2. While it is true that Western currencies such as the Euro and the British Pound are weakening against the dollar, it is primarily due to their exposure in Turkey. In other words, the world is worried about what would happen to European Banks that have lent billions to Turkey, should the Turkish Lira sink. India, on the other hand does not have any exposure in this. If anything the Rupee should hold its own against the Dollar or even appreciate a bit.
  3. Regardless of the Turkish Lira crisis, which just erupted a few days back, the Rupee has been weakening against the dollar all year, down by about 8.3%[1].
  4. Moody’s Investors Service’s external vulnerability index —the ratio of short-term debt, maturing long-term debt and non-resident deposits over one year calculated as a proportion of reserves — puts Indonesia at 51 percent and India at 74 percent. The reason India does so poorly is because Moody’s thinks that India has a foreign exchange reserves problem[2]. What it is hinting, according to me, is that there is a trust deficit on the amount of India’s foreign exchange reserves.
  5. Since India is growing fast, I would expect the Reserve Bank of India to step in and shore up the Rupee. After all, they have $400 billion dollars in reserves and timely interventions will send the message out to the world that India is the go-to place for Manufacturing (now that China and US are at loggerheads with each other).

In summary, I think there are other factors at play – to eliminate any suspicion of Currency markets rigging, the Securities Exchange Board of India (SEBI) needs to come out and state whether the allegations of the whistleblower Ken Fong are true and if so how this has been rectified[3]. It is already close to 18 months and this should have been addressed a long time ago.

Secondly, the truth of the exposure to loans such as the ones given to Nirav Modi by the Punjab National Bank (PNB) should be completely documented bank-wise and shared with the public. How many Letters of Intent were issued bypassing the Core Banking System[4]?

The Non Performing Assets problem is of the previous regime and you should not have to bear the yoke of this challenge all alone. Come clean and tell the truth. The people understand and repose their faith in you. Sooner or later, there has to be a catharsis. It is best that you let the public know the real state of India’s banks.


[1] Rupee breaches 70 mark, putting pressure on govtAug 14, 2018,

[2] Indian rupee worst hit among Asian currencies this year, check out others – May 29, 2018, Financial Express

[3] Whistleblower Ken Fong claims rigging of Currency Markets in NSE by a few Aug 14, 2018,

[4] Banking scam has UPA era rootsFeb 25, 2018, The Sunday Guardian

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An inventor and out-of-the-box thinker, Sree Iyer has 37 patents in the areas of Hardware, Software, Encryption and Systems.

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  1. Indian rupee seems to have resisted a tour that some other currencies could not. Global factors have affected rupee. There is no doubt about that.

    I am surprised by the tone of this article.

  2. Dear Sir,

    1 important fact for outflows from Turkey is lack of investor confidence, which leads to redistribution of funds where better returns can be expected. As such India, which has a growing and booming economy, should be a net receipient or beneficiary from the Turkish “crisis”. As such the INR-USD movement looks strange. I also read with interest the NFD explanation in today’s economic times (suspiciously a planted article) and upon closer reflection it does not explain in any way whatsoever the recent INR-USD rate. To simplify matters using Ken Fongs letter I am able (today) to realize a profit on a relatively minuscule forex INR-USD trade. I shudder to imagine what “big” players are reaping

  3. NOT all things are transparent in Modi govt. Yes there are strong non-performing finance issues especially when you have a lawyer as finance minister i.e. Arun Jaitely. He should go & bring in Dr. Subramaniam Swamy to guide India. Abolish income tax & raise the GST slabs. Remove & dismantle the income tax deparment once for all.
    The hindu astrology clearly specifies that having NINE ministries or maximum 12 ministries is enough – one each per planet or one per each bhava/house.
    Sun – administration
    Moon – education & infrastructure
    Mercury – making laws or outlaws
    Mars – Army
    Jupiter – Teacher & banker
    Venus – Teacher & Medicine
    Saturn – Justice
    Rahu – Electronic surveillance
    Ketu – spying on enemies.
    Beyond that nothing else is required, rest of the ministries simply dismantle

  4. I am not an economist but I presume some of the following layperson questions determine the fate of rupee:
    1. Are we earning enough through our exports?
    2. Is our import bill rising?
    3. Is enough FDI/FII investment coming into India? I presume the NRI remittances would be stable.
    4. Are the wealthy Indians remitting money abroad? Are foreign investors pulling money out of the Indian market?
    5. Do “people who matter” believe that Indian economy will do well in the near future?

  5. I welcome the letter of Mr. Iyer on behalf of intellectuals from public to point out real facts and directly to PM who is in the helm of affairs of this country.It gives him insight of the problem prevailing in today and how to rectify and overcome the situation. Every individual has their own drawbacks and self interest which prevails over common interest of the nation. Mr. PM in his own interest has to take bold step at this juncture instead of worrying for the criticism of the opposition as well as with in for the mjority of the Indians who had pinned their hope on his administration..


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