Rupee at record low: Is the currency weakness benefiting the economy?

The rupee fell to a record low of 90.80 per dollar today before ending at a fresh all-time low of 90.74, falling 25 paise over its previous close. The weakness in rupee is caused by an impending India-US trade deal and persistent foreign fund outflows.

"The Indian rupee plunged to a record low, positioning it as the worst performer among the Asian currencies. Despite the better-than-expected trade balance number, the rupee was unable to find support," said Dilip Parmar, Research Analyst, HDFC Securities.

The rupee has fallen 6% this year. 

Sudip Bandyopadhyay, Group Chairman, Inditrade Capital in a conversation with Business Today said there is a kind of tariff which has been imposed on India.

The government wants exports to remain competitive and one way to ensure competitiveness is to let the rupee fall to an extent, said Bandyopadhyay adding that RBI is probably kind of holding back and letting the rupee depreciate a little more to benefit exports. 

Commenting on the ongoing currency weakness,he said, "Look, 2-3% depreciation annually is an accepted target, but I think depreciation beyond that is being allowed now to ensure that India remains competitive overall and that is probably a conscious strategy which the government has adopted, otherwise probably this would not have happened."