Business Standard

Aim long term for a strong currency

Strong currencies reflect strong economies

illustration: Binay Sinha
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Illustration: Binay Sinha

Shyam Ponappa
Is a strong currency not desirable for India? There seems to be broad acceptance that a declining rupee is essential for exports. Is this true long term  that it is in India’s interest to have a currency that is consistently losing value? Consider this in the context of our long-term interests.  

As exports become more expensive with a stronger currency, sectors relying on wage-rate arbitrage, such as Information Technology Enabled Services and labour-intensive manufacturing, will suffer reduced margins, or may even become unviable. Such activities ideally need policy support for transition where feasible to more productive alternatives over a reasonable period.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper

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