Question

‘Recently, the Indian Rupee (₹) has depreciated significantly. This has led to distress for Indian importers.’ Defend or refute the given statement with valid reasons.

Answer 1

The depreciation of the Indian Rupee has created stress in the Indian market. This is because when the rupee loses value, imported goods become more expensive. As a result, either the imports of foreign goods decline, or they become costlier for consumers.

For example, cloth imported from the US will cost more than earlier due to the depreciation of the Indian Rupee. This increase in price makes the imported cloth expensive and may reduce its demand and imports.