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INMANTEC, Ghaziabad
Appreciation & Depreciation
• Appreciation means when the value
of rupee against $ move up.
• $ got weaker when rupee got strong
• Depreciation means when the value
of rupee against $ goes down.
• In that case $ got stronger than
Reasons of Fluctuation
Effect on Export

• Increasing the value of rupee has

destructive impact on exporter
• And decreasing value have positive
impact on them.
• Supposing a BPO company charged
$100 for its services, it would be
getting payed an equavalent amount
to Rs 4800 as per old exchange rates
• But because of the appreciating
rupee, it now gets payed Rs 4000,
and as the market gets increasingly
competative the company cannot
increase the fee it charges the client
to $120 to cover this loss, as it risks
losing the client to some other
• According to the FICCI study, the
most significant impact of the
appreciating rupee is the pressure
on margins, with 86 per cent of the
exporter-respondents complaining
about it.
• This is the crux of the matter behind
the protest among some sections of
exporters against the appreciation.
Effect on Different Sectors

• IT & BPO sector

• Textile and Cotton industries
When Value Appreciated!!!...

• Around 30% of the share of exports

to be affected
• More than 86% of exports in USD
• In Textile and cotton industries,
Exporters considering to layoff
275000 workers by year end
• Erosion of competitiveness
• Business shift to countries with
lower value of exchange rate
Effect on Import

• Value of rupee has impact on import

as on export but vice-versa to the
• In import when the rupee
appreciated, then it has positive
impact on importer and when it
depreciated, then it is harmful for
the importer.
For example

• A importer of gold pay 4800 Rs

for importing gold when Rs. was
at 48 per $. But now when Rs is
at 39Rs per $ then he has to pay
only 3900. so importer always
look for appreciate Rs against $.
Effect on Different Sectors
• Crude Oil
• Pharmaceutical products
• ores and metals
• Imported components such as
Personal Computers and laptops
• For the borrower
• For the investor
• For the country’s Balance of
Why the Rupee
needs to
Addressing Inflation
• Rupee appreciation needs to be
allowed to control inflation
Reduced Production Cost
• Reduced prices of imported raw
material like oil & steel, Hence,
reduced cost of production
Government External Debt
• A 10% rise in the rupee, causes an
equivalent decrease in India’s external
• Reduced Foreign Debts
• Foreign Acquisitions
Cheaper Imported Goods
Cheaper consumable goods
•Consumer electronics

Cheaper travel abroad


Reduced R&D expenses

•Electronic & Electrical goods
Why the Rupee needs to depreciate?
Exports and Exporters
The IT Imbroglio
Stop Job Losses

• In recession, when Rs. is going down,

RBI trying to control and balance the
exchange rate.
• India is import oriented country, so it
should focus to stop more
depreciation in Rs. value.
• To sustain the growth rate, Govt.
should focus on welfare of importer
and exporter by providing subsidies.
Fire the