RBI should let rupee slide to help exports

India should allow the rupee to depreciate to help exports remain competitive, while the RBI should use its ample forex reserves to defend the currency only in a rout situation, industry chamber Assocham said on Sunday. "Any depreciation in the rupee on account of China-led turmoil in the global financial markets should only be a welcome sign for India, else Indian exports will suffer more at the hands of China and other emerging countries witnessing a correction in their currencies," Associated Chambers of Commerce and Industry of India (Assocham) said in a statement here. "India should allow its currency to slide while the Reserve Bank of India (RBI) should use ample foreign exchange reserves to defend the currency only if there is a rout situation. However, there is a distinct possibility that rupee could actually strengthen over the medium term," it said. The rupee slid on Friday by 30 paise to a new 28-month low at 67.59 owing to fresh US dollar demand from importers caused by continuous foreign capital outflows. Meanwhile, the global slowdown has continued to weigh on India's exports, which have declined for 12 straight months. Assocham said the country must ensure that its exports get back their competitiveness even in the midst of a global slowdown. Courtesy: The SME Times.

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