close to six per cent over the last one year, rupee is now trading at 63.63-70
against 66.93 to a dollar in August, 2016. “So, clearly the external value of
rupee has strengthened quite,” the ASSOCHAM Paper said on 6th August.
On the other hand, despite a falling inflation, now ruling at a five –year low,
the rupee has weakened at least in reverse proportion to the Consumer Price
Index (CPI) that is inching up all the same.
inflation is down; but it is still inflation and not disinflation or
deceleration in prices. That means rupee is able to purchase less of
commodities (to the extent of 1.58 per cent at least), but when it
comes to its value measured against dollar, it has gained by about six per
cent”, the paper noted.
rupee has begun to bite exporters, as is evident in the falling pace of growth
in shipments. No doubt, exports have been growing for the last nine
months ending June , 2017 but as the Reserve Bank of India has also
observed that the “export growth weakened in May and June from the April
peak as the value of shipments across commodity groups either slowed or
shown growth of 4.39 per cent to USD 23.56 billion in June 2017, as
compared to USD 22.57 billion a year ago. But this growth had
peaked to 20 per cent in April this fiscal. This deceleration in growth is
visible in the subsequent months. Moreover, thanks to declining value of
dollar, in Rupee terms, during June 2017 exports had shown a negative growth of
0.04 per cent.
year on year value of dollar has dropped by about six per cent, the greenback
was trading at a recent peak of 68.73 in November, 2016 and the decline
from this high has been much sharper at 7.42 per cent. “It clearly
translates into erosion in margins between 6-7 per cent only on account of
currency appreciation and the trend is likely to continue on the back of robust
inflows in the stock market. The inflows of dollar , taking the country’s
foreign exchange reserves to record level of USD 392 billion, are a result of
global liquidity flush finding ways into the financial markets of the emerging
economies”, said ASSOCHAM Secretary General Mr D S Rawat.