The document discusses the depreciation of the Indian rupee and its impacts. It first defines currency depreciation as a loss of a currency's value against other currencies. The rupee depreciation makes imports more expensive, fueling inflation, but benefits exporters who can earn more rupees. It negatively impacts industries like automobiles but benefits the IT industry whose exports rise. The Reserve Bank of India took measures to curb speculative currency practices by exporters and reduced overnight open positions to support the rupee.

1. RUPEE
DEPRECIATIO
N By: Alika Koshy &
Ribhu Vashishtha

2. What is Depreciation ?
A decrease in an asset’s value caused by
unfavourable market conditions.
Currency depreciation ?
Currency depreciation is the loss of value
of a country's currency with respect to one
or more foreign reference currencies

5. Impact of Rupee depreciation
It will make oil more expensive in rupee
terms.
All imports will cost more and this will
increase inflation.
Exporters will gain because they can earn
more rupees for their foreign currency
receipts.
It will make foreign travel costlier and
particular hit Indian students studying
abroad.

6. Impact of Rupee depreciation
Rupee depreciation is adversely
impacting the automobile sector in
India like Maruti Suzuki being a net
importer is incurring losses.
This is a double whammy for Toyota
as on one hand Yen is appreciating
and on the other Rupee is
depreciating.

7. Impact of Rupee depreciation
The rupee currency movement has
been in favour of the IT industry as the
exports have risen as 70% of the
softwares created by the Indian IT
industry are exported.
Rupee depreciation affects the
balance of payment as there are more
imports than the exports which results
in a current account deficit.

8. Impact of Rupee depreciation
• The decline in the rupee will generate only a
moderate impact on rated Indian companies, with
the country’s largest oil refining and marketing
company, Indian Oil Corp., facing the biggest
challenges.
• The recent fall in the value of the Indian rupee is
likely to affect the profits of about 70% of the
companies that are rated in India. Nevertheless
leverage will not improve for most companies,
according to a Standard and Poor’s report.

9. MEASURES
 Exporters were booking a forwards contract, cancelling it and
then rebooking at a better rate, which was contributing to the free
fall of the rupee.
 The RBI reduced the amount of open positions dealers can
maintain overnight. At present, a company’s board is permitted to
fix suitable limits for various treasury functions with net overnight
open exchange positions and aggregate gap limits.
 The broad message the RBI is trying to give is that speculative
tendencies have to be curbed and genuine demand and supply
should be allowed to move the currency rate.
 In another move to defend the rupee, the central bank sold
dollars.
 V Balakrishnan of Infosys, said though the guidelines would not
affect Infosys, it was a good step to reduce volatility and
speculation in the market.