Question: Depreciation of the Indian Currency will lead to promotion of Indian exports.
The correct answer is –
The statement is generally true.
Depreciation of the Indian currency means that the value of the Indian rupee has decreased in relation to other currencies, making Indian goods relatively cheaper for foreign buyers. This makes Indian exports more competitive in international markets and can lead to an increase in exports. In other words, a depreciation of the Indian currency can lead to the promotion of Indian exports.
However, it is important to note that there are other factors that can affect the competitiveness of Indian exports, such as the quality of the goods, transportation costs, and non-tariff barriers imposed by other countries. Additionally, a depreciation of the currency can also lead to higher import costs, which can increase the cost of production for Indian firms that rely on imported inputs. Therefore, the impact of a currency depreciation on exports is not always straightforward and depends on a range of factors.
