Indian rupee has reached to the level of 67 in respect of dollar and Mr. Rajan is closely monitoring the situation. As rupee appreciates it makes import cheaper and export costlier, and vice versa if it depreciates. If you look at India's trade balance we find it negative which means our imports are larger than our exports. We have been importing 3/4 of our energy consumption(Oil,gas etc) where we need to spend huge amount of our foreign exchange. As it is depreciating and has touched the level of 67 our honorable finance minister and Mr. Rajan do not seem worried as oil prices in international market are hovering around $50/barrel which was above 100 at the beginning of 2014. So indirectly this rupee depreciation is not making any huge impact on our fiscal deficit otherwise policymakers would have worried at this level.
On the other depreciation is good for our exporting companies as they are getting more for their exports. So I shall say if oil prices maintain this level of nearby $50/barrel Our respectable governor should be happy.
johnnyhenderson replied
404 weeks ago