The Complex Impact of a Weaker Rupee on Indian Exports

A weaker rupee is often considered beneficial for Indian exports by enhancing global competitiveness. However, the Federation of Indian Export Organisations (FIEO) notes that the situation is multifaceted, as currency depreciation affects input costs, exchange rate stability, and external debt burdens, which counteract the benefits.

The allure of a weaker rupee as a catalyst for Indian export competitiveness may be misleading, suggests the Federation of Indian Export Organisations (FIEO). On Friday, FIEO President Ashwani Kumar highlighted the intricate dynamics of the rupee's recent depreciation against the US Dollar, emphasizing the need for a nuanced approach.

A mere weakening of the rupee isn't a solution to bolstering exports, Kumar argued. He underscored that a strategy addressing root depreciation causes is crucial as competitors' currencies might devalue even more. Such scenarios diminish any gained price advantages for Indian goods in global markets.

With the rupee's drop to 86.22 against the dollar, repercussions include increased raw material costs and price volatility for exporters, amplifying inflation and external debt while compressing consumer purchasing power. The dip is further aggravated as imports surge, even as export figures wane.

(With inputs from agencies.)