Change of value takes place not only with humanity but also with currencies. The rupee has been appreciating against dollar for the past few months. The speed and quantum of the rupee's appreciation was really an unexpected event. The change in currency value radically alters the stake for everyonecompanies, investors and Government. This influences both the exports and imports of our country. It becomes a drastic challenge for Indian exporters and influences their profit level heavily.

This appreciation occurred due to a variety of reasons including rapid increase in India's foreign exchange reserves and a weak dollar. This appreciation has more influence on exports and on Indian economy. Exporters and Government should take proper action to handle this situation. The foreign exchange reserve was $110 bn as on March 2004. It has risen due to the consistent dollar inflow and RBI's actions.

The capital inflow into India is one of the main drivers of the rupee's gains. were a record of $7.7 bn in 2003 and lifted the rupee by 5.2% in 2003. Foreign funds have already invested more than $2 bn in the rapidly expanding economy in 2004. The rupee is seeing a surge due to large fund inflows following the recent Intial Public Offerings (IPO) also. India today has more foreign exchange than it needs, which is why the foreign exchange reserves are overflowing and the rupee is strong.

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