The Indian Rupee (INR) breached the 70-mark against the US Dollar. This would be good news for exporters. However, experts are cautioning the exporters that the benefits from a weaker currency would be negated by the higher price to pay for crude oil.
The rupee rapidly slid after India got affected by the seriousness of the Turkish financial crisis. The Indian Rupee value against the US Dollar began 2018 at 63.67. Although the weaker rupee helps India export goods to the overseas markets, the country is a huge importer of oil, securing more than two-thirds of its needs from abroad.
The Association of Mutual Funds in India has said that any exports spike will be negated by pressures on inflation and the current account deficit. Chief Executive N S Venkatesh warned that it is a double- edged sword for the Indian economy.
The Federation of Indian Export Organisations (FIEO) also opined that any optimism about the falling rupee benefiting exporters should be treated cautiously.
Argentina, Brazil, Russia and South Africa have experienced their currencies slip over the past week, because they depend heavily on dollar-dominated foreign capital.
Federation of Indian Exporters Organisation (FIEO) Ajay Sahai said that though exporters may benefit from a weaker rupee, their competitors too, do so.
High crude prices are troubling the Indian currency no end, the fall in the rupee is leading to a widening of current account deficit of the country where the value of imports exceeds that of the exports.
