Amid global meltdown , rupee breaches 87 against the dollar
(Source – The Hindu, International Edition – Page No. – 1)
Topic: GS3 – Indian Economy |
Context |
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Rupee Breaches 87 Mark
- The Indian rupee fell by 0.6% (49 paise) to close at ₹87.11 per U.S. dollar, after briefly touching ₹87.3.
- The depreciation followed increased tariffs by the U.S. on Canada, Mexico, and China, affecting emerging markets and stock markets globally.
Government’s Stance on the Decline
- The Finance Ministry official stated that India does not use exchange rate policy to boost trade but focuses on managing currency volatility.
- The Indian government remains unconcerned about the rupee’s decline, viewing it as part of global economic uncertainty.
Rising Dollar Index and Global Impact
- The Dollar Index, which measures the dollar’s strength against major currencies, rose to 109.7.
- The rupee’s depreciation makes imports more expensive but improves export competitiveness.
Government’s Economic Strategy
- India aims to handle global uncertainties by enhancing export competitiveness through better quality goods rather than currency manipulation.
- The government’s focus is on self-reliance, developing competitive advantages, and removing cost disadvantages through trade and regulatory policies.
- The Budget includes steps to streamline regulations and reduce trade barriers for long-term economic growth.
Rupee Depreciation |
Potential Advantages
Challenges of Rupee Depreciation
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Practice Question: How does rupee depreciation affect different sectors of the Indian economy? Suggest measures to balance its benefits and challenges. (150 Words /10 marks) |