AS THE NEW year kicks off, the persisting weakness of the rupee vis-à-vis the US dollar in 2024—although not as much as China's yuan, South Korea's won, Türkiye's lira, or Indonesia's rupiah, among other currencies—raises important questions on its effect on the Indian economy.
Those who welcome a depreciating rupee are exporters, as it improves their competitiveness in selling their merchandise abroad. Those who would complain include Indian travellers, who now need to exchange more rupees to acquire dollars for their expenses abroad, so too will thousands of students who plan to study overseas as their loan expenses will be more.
A cheaper rupee is also bad news for the oil import-dependent Indian economy as imports become costlier, besides contributing to higher inflation. The silver lining, however, is that despite geopolitical tensions in West Asia, global crude prices are not ruling at elevated levels due to relative excess supply amidst lower demand for oil. Low prices offset the rupee impact of the costs of rising energy imports. The country's overall import bill will rise as Indian industry is highly import-intensive, thanks to liberal access to internationally available raw materials and intermediate goods—like for assembling smartphones in the country—which become costlier.
This story is from the January 01, 2025 edition of Financial Express Chennai.
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This story is from the January 01, 2025 edition of Financial Express Chennai.
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