Question

The Indian rupee fell 14 paisa to 83-91 aa against the US dollar on Wednesday amid outflow of foreign capital and volatile domestic equity markets. 

The above situation would lead to a surplus in Balance of Payments account of India. Defend or refute the statement by giving a reason.

Answer 1

Defend the statement

Currency depreciation can improve a country’s current account balance by reducing imports and increasing exports, potentially boosting the overall balance of payments.