For the first time, after nine years, the rupee broke the psychological mark of 40 to touch 39.85 against the world monetary parameter, the U.S. Dollar. The main reason being the sudden spurt in capital inflows.
The effects of the same both positive as well as negative were seen here in karnal also. The other day, when I was talking to one of my friend who deals in gift items, mostly imported ones, told me that for a product for which they had to shell out 43 Rs. earlier was available now for a low of 3.50 Rs.. Similarly the Tour n Travel people are also happy as the cost is down.
On the other hand the appreciation of rupee during the current financial year already effected many sectors like IT, textiles, leather industry, pharmaceuticals. This new phenomenon has forced many mid sized software and other exporters to hedge against the foreign currency fluctuations.
So, we can say
Weak Rupee = lower cost of goods for Indian exports, higher cost to Indians for import products, lower trade deficit
Strong Rupee = lower cost to Indians for foreign imports, higher cost overseas for Indian products, increased trade deficit
Although there is some national pride in having a "strong" Rupee, the economic reality is that a weaker Rupee is generally better for the Indian economy.
The effects of the same both positive as well as negative were seen here in karnal also. The other day, when I was talking to one of my friend who deals in gift items, mostly imported ones, told me that for a product for which they had to shell out 43 Rs. earlier was available now for a low of 3.50 Rs.. Similarly the Tour n Travel people are also happy as the cost is down.
On the other hand the appreciation of rupee during the current financial year already effected many sectors like IT, textiles, leather industry, pharmaceuticals. This new phenomenon has forced many mid sized software and other exporters to hedge against the foreign currency fluctuations.
So, we can say
Weak Rupee = lower cost of goods for Indian exports, higher cost to Indians for import products, lower trade deficit
Strong Rupee = lower cost to Indians for foreign imports, higher cost overseas for Indian products, increased trade deficit
Although there is some national pride in having a "strong" Rupee, the economic reality is that a weaker Rupee is generally better for the Indian economy.
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