What is the benefit for the appreciation of the Indian rupee?

An appreciating rupee implies cheaper imports and India’s imports are more than its exports.

Why is USD so stronger than INR?

The reason is quite simple. Most of India’s foreign trade and foreign debt is denominated in USD. Hence any strength in the dollar index gets automatically transmitted to the INR/USD exchange rate in the same proportion. Over the last few years, this has emerged as a key determinant of the value of the rupee.

What are the benefits of a weak currency?

A weak currency may help a country’s exports gain market share when its goods are less expensive compared to goods priced in stronger currencies. The increase in sales may boost economic growth and jobs while increasing profits for companies conducting business in foreign markets.

Is a strong currency good for the economy?

In general, a strong currency means a strong national economy. Also, strong currency limits price increase and lowers the cost of credits because the interest rates are low as the inflation is low. Strong currency increases purchasing power for goods and services invoiced in weaker currencies.

What will happen if rupee appreciates?

Appreciation is directly linked to demand. If the value appreciates (or goes up), demand for the currency also rises. In contrast, if a currency depreciates, it loses value against the currency against which it is being traded.

What does strong rupee mean?

When the rupee rises, the trade deficit comes down. Products that have an import component too become cheaper. Since inflation is high and liquidity is robust, the appreciation sucks in the liquidity from the system.

Will the Indian rupee get stronger?

The Indian rupee has had a stable run this year, but UBS expects it will be ‘short-lived’ UBS strategists expect the Indian currency to weaken to 77 per dollar by the end of the year — more than 5\% weaker than current levels — and depreciate further to 79.5 by September 2022.