exchange rate

Effect of the exchange rate on business

Effect of the exchange rate on business

Readers Question: What are the effects of the exchange rate on UK businesses? The exchange rate will play an important role for firms who export goods and import raw materials. Essentially: A depreciation (devaluation) will make exports cheaper and exporting firms will benefit. However, firms importing raw materials will face higher costs of imports. An appreciation makes exports more expensive and reduces the competitiveness of exporting firms. However, at least raw materials (e.g. oil) will be cheaper following an appreciation. Effect of depreciation in the exchange rate If there is a depreciation…

Devaluation of the Indian Rupee

Devaluation of the Indian Rupee

The Indian Rupee has fallen in value against a basket of currencies since independence in 1947. In recent years, the Indian Rupee has continued to depreciate in value. Indian Rupee value against US Dollar In 1990, you could buy $1 for 16 Indian Rupees. By 2013, the value of a Rupee had fallen, so that you would need 65 Indian Rupees to buy $1. Another way of thinking about it: In 1990 1 Indian Rupee = $0.06 In 2013 1 Indian Rupee = $0.016 This shows…