Exporters benefit from falling rupee, but the importers loss

Dollar Vs Rupees

With the strengthening of the dollar and the decline of the rupee, not only does the common man’s concerns increase, but it also gives the RBI signals to come into action. Even if the Economic Affairs Secretary Subhash Chandra Garg has said that there is nothing to worry about this decline of rupee, but this crisis can not be ruled out. It is worth noting that on Tuesday, the rupee has reached 70 level against the dollar, which is the lowest level so far. The rupee gained 23 paise to close at 69.68 in the day’s trading. But in a while, the rupee dived and reached 70.

The main reason behind this decline in Indian rupee is being considered as a financial crisis in Turkey. In the last few days, Turkey’s currency lira was down by 40 percent. At the same time the dollar index is also rising, which reached 96 level, due to which people are now considering the dollar as safe haven.

Dollar Vs Rupees

What is the benefit of the rupee weakness?

Bad news for importers: This fall in rupees will hurt the importers. Because the fall in rupees will increase the cost of goods coming to India. When the rupee weakens, the importer, especially the oil companies and other import dependent companies, have to clear their rupees for the dollar equivalent. In other words, the weak rupee works on the lines of a kind of import duty.

Silver of exporters: It is not at all that there is only losses due to weakness of the rupee, weakening of rupees is also beneficial for the country in many ways. The weakening of the rupee is the biggest advantage to the exporters. The weakness of the rupee means that the dollar strengthens the automobile sector with IT and pharma. Exports of companies engaged in these sectors are highly dependent. In such a situation, IT companies like TCS, Infosys and Wipro benefit from the strength of the dollar. At the same time, companies like ONGC, Reliance Industries, Oil India Limited are strongly supported by the dollar as they sell fuel in dollars.

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