Our rupee trade-off

But it’s nothing to get too sweaty around the collar about. True, a falling rupee has been enlarging our high import bill, which fuels local inflation. And given our high dependence on inflexible imports of energy, a fast-sliding currency poses a big headache, which the Reserve Bank of India has tried to relieve through various means. Indeed, it has tools at its disposal beyond selling some of its dollar reserves to prop up the rupee. But a weaker rupee can also give exports an edge. It just so happens that the dollar is gaining globally, not just against our currency, and so rupee support would be doing exporters a bad turn. Thus, RBI should also watch the rupee’s trade-weighted movements. On that count, our currency has lately strengthened against the currencies of big export markets. While inflation control is a well-judged priority, India’s export competitiveness matters too.