Cheaper rupee = opportunity

The 15 per cent fall in the rupee’s external value, measured against the US dollar, reflects the manifest weaknesses in the country’s external account. The imports of goods exceed their exports by as much as 50 per cent. After taking into account the trade in services and remittances from Indians overseas, the total current account deficit is running at about three per cent of GDP, a higher level than what most economists would consider safe. Net inflows on the capital account have neutralised the deficit on the current account, and it is a relief that foreign direct investment has picked up this year after the slide in 2010.

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