Rupee at 80: Little relief on the cards from high trade deficit

A depreciating rupee, which briefly hit 80 to the dollar on Tuesday, may boost India’s exports but price-inelastic imports of crude oil and gold would mean limited relief on the trade deficit, which clocked a record $26.2 billion in June.

Due to global risk aversion on the back of geo-political tensions and aggressive policy tightening by the Fed, the dollar has appreciated against most currencies, including the rupee.

And, with other currencies depreciating, India’s comparative advantage in this respect may be limited.

“The weakening of the rupee is good from a trade balance perspective because it promotes exports