Currency appreciation: is it desirable?

A question from Yahoo! Answers:

Can planning be done for becoming top valued currency – country of the world ;if so in how much period next?

” Economic development of India at more faster / but sustainable rate of GDP / and estimated approx. projected time period for becoming India’s currency top valued ” should be taken as reference for answering the question.

Why in the world would you want to make your currency “top valued”? This will hurt your export-oriented industries and make life miserable for those who compete with imports in the domestic markets…

Currency is a medium of exchange, not a symbol of national prosperity. The highest value of the U.S. dollar, for example, was observed at the height of the Great Depression. That value reflected the splendid shape of the U.S. government finances (budget surplus), the U.S.’ trade surplus (mainly a consequence of the Smoot-Hawley Act which substantially increased tariffs), and deflation. What this value did NOT reflect was the unemployment rate hovering between 12 and 25%, declining real wages, failing banking system, and record levels of business bankruptcies…

Back to India, your top priority should be not the currency, but export-led industrialization. Right now, the proportion of rural to urban population in India is 70/30. If you are to become a successful industrial (and then post-industrial) nation, this ratio has to reverse in the next 30-50 years. The time to prepare your cities for it is now. Same goes for basic education; India has gone to great lengths to ensure the availability of primary education (including girls’ involvement); now is the time to repeat this success with the secondary education. Infrastructure is another spotty area; privatizing telecommunications worked very well for India, but now something has to be done about electricity and transportation to support the growth of the Indian economy. Whether it is another privatization, some sort or public-private partnership, or greater public investment is entirely up to the people of India. Healthcare… where do I even begin? At the beginning, I guess; you can’t aspire to become a developed nation and have less than half of all births attended to by a healthcare professional. Infant mortality rate of over 60 per 1,000 of live births is nothing to be proud of, either…

To summarize, currency should be the least of your worries. You’ve got real issues to work out, and currency is not one of them. The government should pay attention to education, healthcare, and infrastructure; the private sector will gladly take care of the rest. What happens to the currency in the process of doing so is largely irrelevant. For example, both the Japanese yen and the Hong Kong dollar depreciated substantially against the backdrop of rapid growth and development in their respective countries…

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