Eg: Software companies, seafood exporters etc. This situation badly affects importers or those who wish to visit the US for holidays as they need more local currency to get the same service or product. Alex Andrews George is a mentor, author, and entrepreneur. He is the author of many best-seller books like 'Important Judgments that transformed India' and 'Important Acts that transformed India'. In respect to his local invironment he is making more money and that is all matters if he spending all money in local.
And in respect to international invironment he is making same money. Why a import based economy like India and Pakistan would depreciate rupee? What are consequences and reasons to depreciate local currency? Please answer considering present conditions of both countries. Good query. For import based countries, depreciating rupee affects the balance of payments, though it may help a few export-oriented sectors like IT.
However, no country wishes to be import-dependent and the focus would be to promote export. Pls clear with an example sir.. They will get less amount compared to the rupee devaluation.. For example, consider that Mr. X is an exporter. Thus he earns more in Indian currency if the rupee depreciates. I we the Indians sell those two apples at a cost of 50 rs per each we will get rupees even in india then why to sell to america.
Sir, really very very very very good explaination. I could see interest that make the students understand concept with simple language, thank you so much. You are contributing a significant development in shaping our general knowledge skills…Thanks a lot sir.
Very Nice…Totally Understood the concept why we become less competitive at international market when there is appreciation in indian rupee.. Thank you so much…. Why does this apple example seem flawed? Sir how selling and buying of dollars affects devaluation or revaluation. Please explain with an example.
Really resourceful content. Grately helped me in understanding core concepts. The examples given at every instance can make even a novice clear about every aspects of the content.
Sir , Your article is so helpful for me as I have a doubt, what will happen to the export prices in local currency if the currency devaluated???
Will it be a loss for me of 25 paise per USD? However, a sharp fall in oil prices should come as a respite to India and lower its import bill. A falling rupee is good news for sectors like information technology, textiles, handicrafts and leather. But the extent of the benefit will depend on global demand and growth, both of which are subdued due to a near halt in economic activity seen across service sectors like aviation, hotels and the tourism industry.
Also read: Sensex plummets over 2, points, Nifty drops below 7, as coronavirus carnage continues. But on the other, low prices is positive for the crude imports bill.
In addition, the government may get some fiscal headroom as falling oil prices could give the government more space to increase excise duty on petroleum products without increasing the final prices for consumers. Ajay Sahai, Director General of the Federation of Indian Export Organisations said that along with the depreciation in the rupee, currencies of many other countries are depreciating at a faster pace.
Currencies of our competitors like other Southeast Asian countries and Brazil are also depreciating against the dollar. In the past one month, while the Indian rupee has depreciated by 5 per cent against the dollar, the Brazilian real has fallen by 19 per cent, the Malaysian ringgit has depreciated by 5 per cent, the Thai baht by 4 per cent and the Indonesian rupiah by 13 per cent.
Foreign investment and ECBs have provided support to the capital account, and the net accretion to forex reserves reinforces the strength of this balance. The RBI has taken positive steps to counter the present volatility which will help to an extent.
The current account deficit has also been falling and was at one percent of GDP in the April-December period as against 2.
Also read: Indian economy faces bigger risk from coronavirus because it is informal. India needs free, fair, non-hyphenated and questioning journalism even more as it faces multiple crises. The price of petrol went up by 18 paise and diesel shot up by 33 paise read here: bit. A continued slump in the value of the rupee means fuel prices are likely to go up, making your commute and everyday activities expensive.
If you set a budget on how much you spend on fuel every month, you may have to readjust that now. The rise in fuel prices typically has a direct impact on prices of everyday consumption items, be it manufactured goods or agricultural products. Rising fuel cost could result in an increase in the price of everyday essentials such as milk, eggs, fruits and vegetables. However, the government in its recent announcement said that the inflation level at 3.
So, this depreciation is not likely to have much impact in terms of interest rates going up," said Shetty. Though currency exchange rates usually come into the picture for international transactions, continued depreciation can have an impact domestically as well. Navlakhi said investors must look at assets that can help them hedge against inflation.
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