25 SEP 2011 post BY MELWIN
Indian Rupee, climbly breached the Rs 50 per dollar bill stop and closed at 49.90 - its weakest since May 14, 2009. The rupee has depreciated by oer 12 per penny to close to 50-a-dollar mark currently from its near 44-level against the US currency at the end of July ascribable to carry on dollar demand from banks and importers in view of the firm dollar sentiment fueled by Euro zone crisis.The weakening of Indian rupee against other foreign currencies,especially dollar, is not a upright news for Indian government and importers. A depreciating rupee may compound the macroeconomic problems as prices of imported goods allow surge and worsen the current account deficit. India wont be able-bodied to take advantage even if commodity prices ease due to global slowdown.
Why is rupee depreciating?
The ongoing rupee weakness is basically due to the European crisis and has nothing to do with the domestic economy. Due to the up trending crisis in Europe, large banks, investors and pecuniary institutions started selling euro and bought dollar, thus dollar appreciated against all study currencies including rupee.
Cheerful news for Exporters
When a currency depreciates, the exporters make more than profit because they get more of the local currency for both unit of foreign currency though the quantity of mint remains unchanged. The depreciating rupee will be overbearing for the Indian IT sector who generate more than 85 per cent of their $70 billion revenue from the overseas markets and this kind of delay in foreign currency will enhance their literal realisation of revenue in dollar terms.
Good word for Indian Expatriates from US and Arab countries
Expatriates living outside India in US and Arab countries gain by rupee depreciation. Since rupee depreciated from 43 to 50 against dollars. remittance of 1000$ now makes Rs7000 more for an Indian residing in US.
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