The Indian rupee has fallen to a record low of 88.75 against the US dollar, marking a decrease of 47 paise. This decline has sparked mixed reactions among exporters, who believe it could enhance price competitiveness in global markets. However, they also express concerns about the associated risks, such as heightened volatility and increased costs for imports.
Certain sectors, notably those reliant on imports such as gems and jewellery, petroleum, and electronics, may not see significant advantages from the depreciation of the rupee. Industry leaders have pointed out that the rising costs of essential components could neutralize the benefits gained from a weakened currency. S. C. Ralhan, President of the Federation of Indian Export Organisations (FIEO), emphasized the need for stability in the currency’s value to maximize benefits for exporters.
S. K. Saraf, Founder Chairman of Technocraft Industries Ltd, echoed these sentiments, noting that the weaker rupee offers some relief, particularly as Indian products face increasing tariff pressures in markets like the US. He speculated that the rupee could potentially reach 100 per dollar within the next four to five months, suggesting that such a valuation might become the new norm.
On the flip side, traders are warning that increased import costs could significantly impact the economy. India is heavily reliant on imports for approximately 85 percent of its oil requirements, which includes petrol, diesel, and jet fuel. The importation of other essential goods such as coal, chemicals, plastics, vegetable oil, fertilizers, machinery, gold, and various precious stones and metals could also become increasingly expensive.
Yadvendra Singh Sachan, Managing Director of Kanpur-based Growmore International Ltd, articulated concerns regarding currency volatility, stating that fluctuations adversely affect both exporters and importers.
Despite these challenges, India’s merchandise exports experienced a rise of 6.72 percent, reaching $35.1 billion in August. Between April and August of this fiscal year, exports accumulated to $184.13 billion, while imports saw a more modest growth of 2.13 percent, totaling $306.52 billion.
