Should INR be allowed to depreciate
What is Currency depreciation According to the online platform Investopedia “Currency depreciation is a fall in the value of a currency in terms of its exchange rate versus other currencies. Currency depreciation can occur due to factors such as economic fundamentals, interest rate differentials, political instability, or risk aversion among investors.” It further says that “Countries with weak economic fundamentals, such as chronic current account deficits and high rates of inflation, generally have depreciating currencies. Currency depreciation, if orderly and gradual, improves a nation’s export competitiveness and may improve its trade deficit over time. But an abrupt and sizable currency depreciation may scare foreign investors.” What causes Currency depreciation Any depreciation in currency has big consequences for an economy more so in the context of a developing economy like India, as any major fluctuation may have a deep impact on health of the economy including balance of trad...