Rupee Depreciation: A Boon or Bane?

Bangalore: Though the battle between Rupees’s depreciating value against Dollar was on for a long time but the weakest fall was at 55.26/27 per dollar as since November 29. Now Angel Broking stated with its currency reports that Indian rupees is expected to depreciate more due to mixed global market trends.

On one hand where it is considered as an alarming situation for the Indian economy, on the other few consider it to be beneficial in the long run. Government is taking up different measures to boost up trades and facilitate capital inflows to control the possibility of inflation.

The steps taken include hike in FII investment, limit in debt securities, enhancing ceiling for ECBs between 3-5 years maturity, high interest rate ceiling for foreign currency, NRI deposit and deregulation of interest rates on rupee, denominated NRI deposits.

According to International Monetary Fund (IMF) representative Arvind Virmani Depreciation in rupee is not a bad news for the Indian economy, though it will have some implications for the industry. "I don't think depreciation of rupee hurts the Indian economy. When we have slowing economy and rupee depreciates, it is positive for India," as quoted by PTI.

Finance Secretary R S Gujral said the depreciation of the Indian currency will ultimately help exporters in the long run. "The depreciation of Rupee prima-facie would help exporters in terms of higher realization in terms of rupee... overall in the long term it would help the exporters”, he adds.

In the fuss between all the contradiction it has been hard to foresee that will the depreciation in the value of rupee will actually be helpful for the Indian economy.

Affect of Currency Decline:

For Investment sector profits of companies with towering foreign currency debt and imported inputs may drop down. Imported items like fuel etc may become costlier and foreign traveling expenses will increase along with education cost in abroad. Loan burdens may boost up.

Positive Aspects:

Positive aspects may count few things like more money will be received by people like IT professionals on converting dollar into rupee. Gold and International fund investors could gain profit. Export concentrated companies may have high revenues and travel and tourism may increase in India helping local industry to shoot up.