Indian rupee saw an erosion of 21.2 per cent in value against the US dollar in 2008-09 after the fall of the Lehman Brothers in September and outflow of investment from the country.
The value of the local currency which has a major bearing on exporters' performance, declined from Rs 40.36 in March 2008 to Rs 51.23 in March 2009 per US dollar.
"With signs of recovery and return of FII flows from March 2009, rupee has been strengthening against US dollar," the Economic Survey tabled in Parliament said today.
It said a major factor which affected the emerging economies during 2008-09 was the unwinding of stock positions by FIIs to replenish their cash balances abroad.
"Decline in rupee became more pronounced after the fall of Lehman Brothers in September 2008, requiring RBI intervention to reduce volatility," the survey said.
India's exports grew by a small margin of 3.4 per cent to $168.7 billion and would have fared worse but for the rupee depreciation which was seen during the later part of the fiscal 2008-09.
However, exporters like several industrial houses had to bear losses on account of exotic derivative contracts which they entered into without understanding them, industry officials said.