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More action needed to help exporters

Its fall might help, for now, exporters whose import intensity is not high

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TNC Rajagopalan
Last Wednesday, the rupee depreciated to over 68 a dollar; the Reserve Bank of India (RBI) intervened to help it gain some strength and it closed at 67.35 on Thursday. On Friday morning, however, the rupee slid to 68.01, resuming a weakening trend that started about six months earlier.

Its fall might help, for now, exporters whose import intensity is not high. Demand for price-elastic imported goods might go down, helping bridge the current account deficit. However, it might have an inflationary impact that might warrant higher interest rates.

The immediate trigger for the fall was the rise in crude oil prices
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper