#CurrencyDynamics

BasisPointInsight.com - Why a Weaker Rupee Doesn’t Always Mean Stronger Growth by V Thiagarajan Exchange rate depreciation is often read as an engine of growth. For India, import dependence and balance sheet vulnerabilities tell a different story. by V Thiagarajan, BasisPointInsight.com

1/2 A weaker rupee is often framed as a growth tailwind. In India’s case, that link is far less reliable. When imports sit deep inside the export chain and corporates carry unhedged foreign currency exposure, depreciation raises costs as much as it boosts competitiveness.

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A central currency must flow outward, whether through trade deficits or asset purchases. The US mastered this balance, but China’s surplus-driven model makes global reserve status unlikely. Incremental regionalisation seems more plausible than outright replacement. #GlobalEconomy #CurrencyDynamics