Business Today

Time To Get Real

In the last week of August, the Indian Rupee depreciated to Rs 72 to a dollar, the lowest in nine months
twitter-logo Joe C Mathew   New Delhi     Print Edition: September 22, 2019
Time To Get Real

In the last week of August, the Indian Rupee depreciated to Rs 72 to a dollar, the lowest in nine months. Conventional wisdom says this should make exporters happy as it improves their competitiveness. Some of them, who do not depend on imported raw materials, are indeed happy but others find the increase in input costs an added burden.

What worries everyone is that the currency of their main competitor, China, is also depreciating at a much faster pace, against the US dollar. In addition, to effectively manage its currency, China is also providing several support measures to cushion exporters from the impact of higher tariffs slapped on them by the US as the result of an ongoing trade war between the two countries.

The result: Indian exporters are on tenterhooks as they are uncertain about how long the trend of rupee slide will last. The rupee moving towards its real effective exchange rate is perhaps the way forward.

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