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India’S Currency Attracts Investors, But Damages Exports

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India — As talk of currency battles rumble through the global economy, India has been a reluctant warrior.

The reasons are evident here in Coimbatore, a southern city long known as a capital of India’s textile industry, an old-line export trade. Recently, demolition crews razed an abandoned textile mill to make way for the Alliance Mall.

From the ashes of an export industry rises a temple to foreign investment and local consumption. And it is all in keeping with India’s approach to a rising currency.

The Indian rupee is soaring — up 9 percent against the dollar in the last 16 months. That has taken a toll on exports like textiles by making them more expensive on the world market. And the strong rupee poses longer-term threats of overheating the economy.

But instead of fighting currency appreciation, as Brazil and some other countries have done, India has been willing to let the rupee rise — for now, at least.

India is simply too hungry for the foreign capital that is drawn to the strong rupee and is driving it higher, because that influx of money is helping support this country’s approach to developing a modern consumer economy.

The Alliance project, with more than a million square feet of retail space, a hotel, offices and condominiums, is being built by an Indian developer with financing from a British retail company and a South African investment firm.

Building a consumer driven economy, that's worked out so well for the West....

Edited by interestrateripoff
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