A plunge in the value of the Indian rupee to record lows over the past week as Asia’s worst-performing currency could be a mixed blessing for the South Asian economy, which has been gunning for months to reach a trade deal with the US, observers say.
The Indian rupee has extended its slide to more than 90 against the US dollar this week, after breaching the 90-level mark last week.
While the drop in the currency’s value will make everything from the country’s massive oil imports to the cost of students studying abroad more expensive, the slide is providing relief to labour-intensive export industries that have been hit by American tariffs of up to 50 per cent, analysts say.
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Ajay Sahai, director general of the Federation of Indian Export Organisations, told This Week in Asia that the drop was creating room for exporters such as apparel and footwear makers to absorb some of the tariffs and retain customers in their largest market.
“They are managing in the hope that we will have a bilateral agreement with the US soon. For them, the rupee depreciation brings a little relief,” he said.
The country’s merchandise exports fell by 11.8 per cent to US$34.4 billion in October. Shipments to the US declined by 8.5 per cent – a second straight month of contraction.