Appreciation of rupee against dollar– chartThe appreciation of rupee is hitting exports, especially software and agricultural exports from India. Despite that, there is little reason to check the appreciation of the rupee resulting from inherent strength of the Indian economy.

However, rupee should not be propped up through borrowings. India has foreign exchange reserves of about 200 billion dollars. Out of this, external assistance and commercial borrowings constitute more than 50 billions.

There is no need to add to this while premature payments could be effected in case of existing loans. The country needs foreign exchange reserves to meet only six months imports (3 to 4 months according to the RBI). Balance can be used for infrastructure development.

Oversees Keralites will be hit by declining value of Gulf currencies against the rupee. But the purchasing power of men making their earnings within the State will increase. This is desirable when gap between gulf returnees and the ordinary folks in the State is increasing.

Related blog:

Falling dollar, rising India

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