Finance, Forex and Investments

Suppose if india starts a new currency i.e.100 paisa = 1 cent what will its impact on govt economy or people.?

This means new currency may be in doller,cent or rupees, paisa. But 100 paisa = 1 cent or 1 new paisa or Rupee 100 = 1 Doller or 1 new Rupee.Please answer Will it have any loss to General public or Goverment or Reserve Bank of india.or otherwise will this benefit to general public or goverment and save heavy printing of currency,save heavy money handling for banks and atm,s and bring out blackmoney out.

Public Comments

1. Actually it is very hard to intergrate a new currency. Look what happenned in Europe when they adopted the Euro. It still isn't over. But the concesses is that it was a good thing to do
2. If this would be an already existing currency, then it would have some impact otherwise nothing matters with the name. If this is just giving some new name and converting its numeric value, then what actually changes is the amount of money people need to carry nothing else.
3. If India starts a new currency system, they will value it against the dollar according to what the old currency system is now, so it will not have a benefit or an adverse effect. The effect is neutral. It is simply a new way of describing money. Turkey started a new currency system in 2005 where they dropped 6 zeros from their money.....1,000,000TL became 1YTL on January 1, 2005. The value against other currencies such as the USD remained the same. For example, if the value was 1,350,000TL to US$1 before 2005, the new value was 1.35YTL to US$1 after 2005. They just moved the decimal place over to accommodate the change.
4. You have essentially proposed the linking of the Indian currency to the US dollar rather than allowing the Indian rupee to fluctuate relative to the US dollar (as is the case today). You have also proposed the devaluation of the Indian rupee in relation to the US dollar. The impacts to the economy of India are the following: i) the amount of rupees required to par for imported US goods would increase significantly and the amount of rupees obtained for Indian goods exported to the US would likewise increase significantly. This would benefit the Indian economy if the balance of trade is in favor of India (ie more exports than imports) and vice versa. The Reserve Bank of India would need to print more rupees to compensate for the lower value of the Indian rupee in relation to the US dollar. If it did not it would amount to the tightening of money in India and drive up inflation and interest rates. Individual Indians would need to obtain higher salaries to keep pace with inflation...otherwise they would end up with lower buying power. This approach to currency control in India is currently used by China.