Q. With reference to the rupee depreciation, which of the following statements are correct?
1.It reduces the oil import bill.
2.It increases competitiveness of Indian exports.
3.The rupee value of remittances increases.
Select the correct answer using the codes given below:
Answer: B
Notes:
Explanations –
Statement 1 is incorrect. A depreciating rupee increases the cost of imports, including crude oil, as oil is priced in U.S. dollars. India, which imports over 85% of its crude oil needs, faces higher import bills when the rupee weakens.
Statements 2 and 3 are correct. A weaker rupee makes Indian goods cheaper in global markets, improving their competitiveness and boosting export potential. A depreciating rupee benefits non-resident Indians (NRIs) sending money back to India because they receive more rupees for the same amount of foreign currency. This increases the value of remittances in rupee terms.
Source: The Hindu
