Confusing currencies
Been in India for four days and the USD - INR chemistry confuses me.. A dollar can fetch you an record high 51.4 rupees. The way I understand this is that rupee has never been weaker, and the American goods never more expensive..
Couple of days back, I went to a local Chemist in Chembur to gather up the stuff for shaving as I had little space left to pack it all from the US. The following were the purchases
AXE deospray 150 ml - Rs 165 (which converts to $3.2)
Gilette foam - 250 ml - Rs 225 (which converts to $4.36)
Mach 3 turbo - 4 blades Rs 425 (which converts to $8.25)
I used to buy these items at pretty much the same price at Target in the US. Back in 2004, someone mentioned that the buying power of the dollar was 10 times that of the Rupee. Well logically it should be 51.4 times, shouldn't it?
The reality is that India and most of East Asia is crowded with American brands like Gap, Gucci, Levis etc. People in the states get fat discounts on a lot of these items. In the days of recession, the discounts are very deep sometimes exceeding 50%.. On the other hand, most outlets in Mumbai charge full retail price (converted to Indian rupees).
There is no doubt that the western goods are super-fashionable and of very high quality, and hence worth the price. What confuses me is that in a global village, the prices are not flattened to the local buying power.
Couple of days back, I went to a local Chemist in Chembur to gather up the stuff for shaving as I had little space left to pack it all from the US. The following were the purchases
AXE deospray 150 ml - Rs 165 (which converts to $3.2)
Gilette foam - 250 ml - Rs 225 (which converts to $4.36)
Mach 3 turbo - 4 blades Rs 425 (which converts to $8.25)
I used to buy these items at pretty much the same price at Target in the US. Back in 2004, someone mentioned that the buying power of the dollar was 10 times that of the Rupee. Well logically it should be 51.4 times, shouldn't it?
The reality is that India and most of East Asia is crowded with American brands like Gap, Gucci, Levis etc. People in the states get fat discounts on a lot of these items. In the days of recession, the discounts are very deep sometimes exceeding 50%.. On the other hand, most outlets in Mumbai charge full retail price (converted to Indian rupees).
There is no doubt that the western goods are super-fashionable and of very high quality, and hence worth the price. What confuses me is that in a global village, the prices are not flattened to the local buying power.
posted by Mohit Gupta at 3:08 AM
1 Comments:
I have an explanation although I could be wrong.
I think the paradigmatic case here is coffee (or tea). One can have tea at a chaiwalla for Rs 3, indeed that's what the vast majorities of Indians do. One can also have coffee in an American-style "coffee shop" where the coffee will cost Rs 50 on an average, almost the price in dollars of a cup of coffee here in America. The difference, I think, is that the extra cost is the cost of the ambiance the coffee shop provides, the high rent it presumably pays for said ambiance, and that it is fashionable to be seen in a coffee shop having coffee. As the buying power of the young Indian middle-class increases, I think these prices will stay up, and then may be come down when there are enough coffee shops for everyone.
I don't quite know how to extend this argument to the shaving equipment at your local chemists but I think its precisely the buying power of the middle class that makes the prices high rather than flattening them.
Post a Comment
<< Home