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Home ] Indian Economy ] International Affairs ] [ Foreign Loan ] Rupee Appreciation ] Media Engineering ] LOKGEET ] Farmers ] [ Rockford Foundation ]

  

  Financial Engineering > Foreign Loans

17 September 1996 

 

I N T E R N A T I O N A L      I N D I A N

   

FINANCIAL ENGINEERING OF ( LOW INTEREST! )  

F O R E I G N     L O A N S

SPECIFICALLY, TO BE REPAID IN FOREIGN CURRENCY

 

"SAMARTHA"

  

Here is a sample calculation in Financial Engineering of (LOW INTEREST!) FOREIGN LOANS, during the ten year period of 1985 to 1995, TO BE REPAID IN FOREIGN CURRENCY, with the following simplified assumptions :

  

Exchange rate of 1 US$ is nearly equal to Rs.11.00 in 1985
Exchange rate of 1 US$ is nearly equal to 205 Japanese Yen in 1985
Exchange rate of 1 US$ is nearly equal to Rs.35.00 in 1995
Exchange rate of 1 US$ is nearly equal to 110 Japanese Yen in 1995

 

ADVERSE EFFECT OF DEVALUATION MAY ENCOURAGE INVESTMENTS OUTSIDE INDIA AND IT MAY DISCOURAGE INVESTMENTS IN INDIA.

Assume average interest rates during 1985 to 1995 as nearly equal to 6.5% on (LOW INTEREST!)   FOREIGN (US$) LOANS, SPECIFICALLY TO BE REPAID IN FOREIGN     CURRENCY, and nearly equal to 12% on DOMESTIC LOANS.

 

Assume compound interest during 1985 to 1995.

When the (LOW INTEREST!) FOREIGN (US$) LOANS ARE REPATRIABLE, SPECIFICALLY TO BE REPAID IN FOREIGN CURRENCY, during the ten year period of 1985 to 1995, it shows an equivalent of nearly 20% in "Rupee Terms" (say, rate of annual Return on Investments, ROI, in INDIA).

 

What can be our century-old wisdom in (proudly!) announcing our (LOW INTEREST!) FOREIGN (US$) LOANS, SPECIFICALLY TO BE REPAID IN FOREIGN CURRENCY [say, at nearly equivalent of 20% and above in "Rupee Terms") as against our low interest (nearly 12%) DOMESTIC LOANS? Great Indian Sixth Sense : MISMANAGE! Are we still immature to understand it?

    

GOING GLOBAL, THE RIGHT WAY...
GLOBAL LEADERSHIP IN RESOURCE MANAGEMENT
FINANCIAL ENGINEERING IN TOTALITY

    
            

Home ] Indian Economy ] International Affairs ] [ Foreign Loan ] Rupee Appreciation ] Media Engineering ] LOKGEET ] Farmers ] [ Rockford Foundation ]

           

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