Weaker rupee seen as boost for exports, but reality is more complex: FIEO

A weaker rupee is often seen arsenic a boost for Indian exports by making goods much competitory globally, but the world is much complex, the apex exporters' assemblage FIEO said connected Friday.

Federation of Indian Export Organisations (FIEO) President Ashwani Kumar besides said the caller depreciation of the home currency against the US Dollar represents a analyzable economical script with mixed outcomes.

"A weaker rupee is not a one-size-fits-all solution to boost exports. A strategic, multi-pronged attack is needed to code the basal causes of depreciation portion mitigating its adverse effects," helium said.

Explaining it further, helium said, that if the rupee depreciates by 2 per cent and the currencies of cardinal competitors diminution by 3-5 per cent, Indian exporters suffer competitiveness successful planetary markets.

"This comparative disadvantage erodes immoderate imaginable terms vantage Indian goods mightiness gain," Kumar added.

The home currency has depreciated implicit 4 per cent past year.

The rupee closed astatine 86.22 (provisional) against the US dollar connected Friday, weighed down by a stronger American currency.

Kumar added that the depreciation besides results successful a emergence successful input cost, speech complaint volatility, inflationary pressure, and outer indebtedness burden.

Many Indian exporters beryllium connected imported earthy materials and components. A weaker rupee importantly raises these input costs, often nullifying the perceived benefits of depreciation.

"Fluctuating speech rates make uncertainty, making it hard for exporters to terms their products competitively and program for the agelong term," helium said adding that the depreciation inflates the outgo of imported goods similar lipid and commodities, driving up accumulation costs and fuelling home ostentation and this reduces user purchasing power.

He added that a weaker home currency increases the outgo of servicing overseas currency-denominated outer debt, creating further unit connected businesses and the government.

Exports contracted for the 2nd period successful a enactment by astir 1 per cent year-on-year to USD 38.01 cardinal owed to planetary uncertainties, portion imports roseate by astir 5 per cent to USD 59.95 billion.