The depreciation dividend

The rupee's sharp depreciation has been the most important issue in the current debate on the state of the economy. However, contrary to the gloom and doom that seem to dominate the discussions, the depreciation is seen by some, and rightly so, as having some major collateral benefits. A currency that has depreciated by about 40 per cent over the past two years should, in theory, make domestic producers significantly more competitive, even if everything else remained the same. Exporters can price more aggressively in dollar terms, while preserving rupee margins. 

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