Depreciation of Indian Rupee - A layman analyses
Deep depreciation of the Indian Rupee A layman tries to understand Indian Rupee, which was quoting around ₹88 per USD two months back, is now threatening to breach ₹92 levels. And in percentage terms, it is 4.5%. As a layman, I attempt to find out the reasons. The monthly imports into India now averages around USD 82 billion, of which merchandise imports alone accounts for USD 65 billion. The average monthly exports from India is USD 72 billion and the share of merchandise exports is less than 50%, the range being USD 34-38 billion. Hence on any month, the merchandise trade deficit is still at USD 25-30 billion and the overall trade deficit is reduced to USD 10 billion, thanks to the substantial increase in the dollar revenue from the services sector. When a country is still reeling under trade deficit, it is logical that the value of the local currency depreciates against the major international currency viz. USD, though the percentage of depreciation has come down considerably ...