EFFECT OF RUPEES DEPRECIATION ON ECONOMY

Effect of Rupees Depreciation

           Rupee, the currency of our country India, is depreciating against Dollar. Anyone can remember that it was below 50 before few days but now it is above 60. Which means now-a-days we have to pay more than 60 Rs. for 01 US Dollar $ which was available for below 50 Rs. before few days.

          Rupees depreciating in such manner is very bad the economy of the country. India deals for lot many things in terms of dollars. Some of the deals done in US dollar $ are:

(1)     Govt. of India takes loans from World Bank in Dollars only.

(2)     Price fixation for the imports of goods are done in US dollar $ only.

(3)     Corporate sector is badly affected due to the import done by them.

(4)     Gold import

(5)     Foreign loans are taken by lot many companies.

(6)     Import of raw materials done in US dollar

          Almost all International deals are done in US dollars only. All the deeds done in terms of $ will now need more Rupees to be paid.

          Rupees depreciation will result into more Rupees outflow and less dollar inflow.

          Affect on the economy will be very bad, increase in CAD will also be seen, Govt. expense for the repayment of loan taken from the World Bank will increase, interest burden for both Corporate and Govt. will increase.

          And some more important thing to keep in mind that the depreciation in Rupees will lead to DECREASE IN VALUATION OF THE COUNTRY.

          Hope for the Best,

                             Our country should not lose its valuation.