What Is Meant by Rupee Depreciation?

Global economic factors affect the value of the rupee.

When a currency loses value in the world market, depreciation occurs. The Indian Rupee has appreciated in value as the U.S. dollar has lost value. The Rupee is also appreciating in value against other major currencies.

Exports

When the Rupee depreciates against other currencies it has the effect of aiding Indian exports. The weaker Rupee drives down the cost of Indian products in the world market.

Imports

Rupee depreciation causes foreign-made goods to be more expensive in India. This means that prices in the country may increase, making imported goods unaffordable.

Regulation

The value of the rupee has a direct effect on the Indian economy; both the government and central bank of India watch it closely. The government manages rupee depreciation by controlling interest rates and giving financial assistance to economic sectors affected by depreciation.

References

• X-rates.com: Historic Lookup
• Naukri Hub: Grey Area of Rising Rupee-Unemployment
• X-rates.com: Exchange Rates Table for the Indian Rupee

Resources

• Bloomberg: India May Shield Exporters from Rupee