DEPRECIATION OF RUPEE IN INDIAN ECONOMY: AN ANALYSIS

From the early 1980s the International Monetary Fund (IMF) has projected devaluation as a potential solution for developing nations that are constantly spending more on imports than they earn on exports. A lower value for the home currency will raise the price for imports while making exports cheaper. Fall in value of rupee can lead to a reduction in citizens' standard of living because their purchasing power is reduced when they buy imports and when they travel abroad. It also can add to inflationary pressure. Devaluation can make interest payments on international debt more expensive if those debts are denominated in a foreign currency, and it can discourage foreign investors. The present paper aims to explore the real implications and causes of the depreciation of the rupee on the Indian economy. Moreover; it estimates that the Indian economy has more to lose and less to gain with depreciation of rupee in long run.