Impact Of Rupee Depreciation On Various Sectors In The International Trade

by Exim Panel Import Export Market Research

Currency depreciation is a fall of currency in terms of its exchange rate in the international market. Currency depreciation occurs due to various factors such as political instability, economic fluctuation, interest rate differentials, risk prevailing among investors. Currency depreciation in one country can affect other country currency. Countries with weak economic environment where there is high - rates of inflation, generally have depreciating currencies. There are various reasons why Indian rupee depreciating. The most valid reason for the rupee’s depreciation is capital outflows, high import costs and a strong US dollar.When the rupee depreciates, its purchasing power in other countries drops. The overall impact of rupee’s depreciation on the Indian economy would depend on how the import export oriented sectors will respond..It is highly suggested to take help from import export data providing consultant who will help you to grow your business by providing accurate USA Import Export Data. Down below are some of the sectors impacted by the depreciation of rupees

1. Textiles

India is one of the largest producer and sixth largest exporter of textiles. Textile is a net exporter; rupee depreciation is clearly beneficial for the industry. The falling rupee will help enhance India competitiveness at the global marketplace leading to increasing the export of textiles.

2. Oil and gas

85% of India’s oil and 50 % of its gas needs are met through imports. In recent times we saw oil prices rise and the rupee depreciate.

3. Steal

With years India’s finished steel products exports rose by more than 25% while its imports dropped by 1.68%. So, the steel sector might be able to take benefit of lower prices due to the Indian rupee failing in value.

4. Information technology

The Indian IT sector creates most of its profit from exports. As the rupee value depreciates, then the international clients will avail the services for less price. If the Indian IT companies can keep up their trend, they will benefit from the Indian rupee depreciating against the US dollar.

5. Automobile and auto components

Sectors that is heavily dependent on imported raw material, such as automobile industries will now have to pay for the imports as the rupee is declining. Since the rising cost of production is passed on to consumers, there is a decline in product demands and a resultant drop in profit levels of these businesses.