Arth-Research

Our currency is treated as devalued when we have to pay more of our home currency to buy a unit of foreign currency.

Rupee has hit the lowest point of INR 91.95 against one dollar. Rupee was roughly INR 3.30 against one dollar in 1947. That’s a distance of almost 30 times! Trade imbalances, inflation and relatively weak growth causes devaluation of a currency. However, it makes exports more competitive in International markets.

Imports become more expensive thus people turn towards domestic markets.

Eventually if the economy stays dependent upon imports for the key resources like crude oil, electronics and technology, devaluation of the rupee would cause import inflation.

Persistent inflation can reduce the confidence of foreign investors causing flight of capital.

However, if we can boom the exports, the situation can turn in our favour.

As a country, collectively we can choose made in India products over imports. Reduction in expensive imports will keep the inflation in check and will also help to preserve the foreign reserves.

Together we can turn the table! 🙂